Offers: Putting your Best Foot Forward

You find a home you love and are ready to make an offer- but how do you do that? What components are necessary to create an offer that will shine above the rest? In a competitive market, multiple offers are common and there are actions that a buyer can take to make their offer more attractive and increase the likelihood that it will be accepted. Most importantly, your offer should convey that you are a serious and able buyer.

Before looking at how to craft an offer, it is important to understand the components of an offer.

Components of an Offer:

Total Purchase Price and Financing: This includes the total amount you are offering to purchase the house, the amount of down payment, and the details on your mortgage.

Contingencies: Do you have any criteria or needs to be met before the offer can move forward. For example, a financing/ mortgage contingency.

Closing Dates: What date are you looking to move in and have full control of the house.

Crafting an Attractive Offer:

The type of offer you submit will depend on what type of market you are in; a buyer’s or a seller’s market. Your agent can help you understand this and decide how best to proceed (or you can read about it here).

Get Pre-Approved: If you are going to have a mortgage, it is essential that you meet with lenders and secure a mortgage. Getting pre-approved and having a verified pre-approval letter shows the seller that you are serious and have a relationship with a bank that has verified your assets and debts.

Pay Cash: The more cash you can offer, the more attractive your offer will be. An all-cash offer is highly desirable because a buyer has all the funding needed to purchase the house outright. There is no risk of mortgage financing not being approved. If an all-cash offer is not possible, increasing the amount you pay in a down payment can also make your offer more attractive.

Timing: If you are flexible on timing, ask the seller what type of closing they are looking for. Show them that you are willing to work with them to come to a mutually agreed-upon closing date.

Look at comps: The seller and their agent will establish the list price of the home based on comparable sales in the area and based on what type of market they are in. Work with your agent to look at comps in the neighborhood. How do current sales compare to the offer you are making? Is the sale to list price ratio high? These questions will help you understand where your offer should be.

Reduce Contingencies: The more contingencies an offer has, the more hurdles it needs to clear before an offer can move forward. The fewer the contingencies, the more attractive an offer will be. If you are willing to move forward without a home-sale contingency or you do not need a mortgage contingency, your offer will appear less risky and thus more attractive to a seller.

Weigh personal desires: While understanding the market and where it currently falls is important, if you find a house that meets all of your criteria and that you feel you can’t live without, tell your agent that you are willing to go above and beyond to purchase the house.