Making An Offer On A House
In most areas, you will not be presenting your offer directly to the seller in person. Your goal when your agent presents your offer is to give the seller few reasons to say “No” and many to say “Yes.”
One effective technique, called “loading,” involves sending a separate statement with your offer that concisely recaps information gleaned from your comparative market analysis (CMA). This is especially important if your offer is below asking price; accepting a lower offer can be emotionally unpleasant for some sellers, and your letter should help ease them through that process.
Why should you need such a letter? To make sure the seller has all the facts. When your agent presents your offer to the seller’s agent, he or she may or may not review the CMA with the seller’s agent to bolster the case that your offer is a fair price. The seller’s agent in turn may or may not present that analysis to the seller. In short, there’s a high likelihood the seller never hears the supporting case for your offer.
However, both agents are required to convey all written documents to the seller, so putting it in writing and attaching it to the written offer ensures the information gets through.
If your offer is substantially below the asking price, a larger earnest money deposit may tip the scales in your favor. Or you could add a provision to increase the deposit to 5 percent of the purchase price upon removal of the mortgage financing or home inspection contingencies.
The other critical piece of presenting your offer is to give the seller a limited amount of time to respond. There is very little reason sellers shouldn’t be able to make a decision within 24 hours, even if, for example, one spouse is out of town. The more time the seller has to respond to your offer, the more opportunity for other offers to be presented.
And don’t underestimate the power of a message that appeals to the seller’s emotional attachment to the house. Sometimes sellers will take a lower price just to be sure the house is going to someone who will treat it well.
To waive or not to waive?
Because each contingency in your purchase offer represents a chance for the deal to fall apart, sellers may be leery of offers with a number of contingencies. This is especially true in markets where several buyers are competing for the same house.
Buyers who have lost a couple of bids may be tempted to waive all contingencies. If you find yourself considering this step, think long and hard. Most real estate professionals counsel strongly against it.
One solution is to retain the necessary contingencies but shorten the compliance time. Rather than 15 days to respond to the seller’s disclosure form, for example, you might specify giving your response in four days. Or you might specify having the home inspection performed within a week instead of 10 to 14 days.
By reducing the amount of time needed to work through all the contingencies, you are demonstrating your commitment to the purchase. This strategy also acknowledges the seller’s desire not to have the property tied up overly long by a contract that might fall through.
In a perfect world, your offer price will be based on facts, so that even if it’s significantly lower than the asking price, the seller should be rational and recognize its validity. However, the seller’s response is beyond your control.
If the seller rejects your offer without making a counteroffer, all you can do is move on.
At the same time, if you hear from your agent or the seller’s agent that the seller has accepted or has countered with a purchase price you’re willing accept, keep your elation in check. Don’t do anything drastic like give notice to your landlord. Sellers have been known to tell their agent one thing on the phone and change their minds later. Remember: Nothing is enforceable until you see it in writing, and you respond in writing.