How Can I Make My Offer More Competitive - The Buying Power Checklist

How can I Make My Offer More Competitive? This is something that we hear often from home buyers who are looking to get a competitive edge when it comes to buying a home.

The Buyer Power Checklist empowers home buyers who are looking for an advantage when it comes to getting their offer accepted to buy a home. It is especially helpful to first time home buyers who have never gone through the process before.

The Buyer Power Checklist breaks down an offers buying power into three different categories. A buyer's offer will either be in the 'Low', 'Average' or 'High' Buying Power category.

Offering Seller Free Occupancy (A Seller Rent Back)

How can I Make My Offer More Competitive? Offering the seller free occupancy through a rent back is a great option for home buyers who have a little flexibility as to when they need to be in the house. A home buyer who is renting a home before has a distinct advantage on offering this competitive advantage.

A buyer should always ask a seller what their preferred closing date is. An idea is to offer them to close a couple days before they intend to close on their next house and rent them the house back at $1 for a short period of time.

How does it help? Well it makes the process a little less stressful for a seller. By closing a couple days before it guarantees that everything will stick to their timeline and that their closing will be seamless.

If you are financing, the agreement with the bank does say that you will be living in the property within 60 days after closing. So this does even allow you as a buyer to give the buyers an even more extended period of time for their move.

There may be an end to your generosity when you eventually will have to make your first mortgage payment. You will want to talk to your mortgage banker or real estate agent as to when that first payment will be.

Writing an Offer Without A Home Sale Contingency

How can I Make My Offer More Competitive? A Home Sale Contingency can be a big negative when trying to get an offer accepted in a competitive situation. Removing a home sale contingency is extremely risky if you haven’t done your due diligence and are not feeling 100% confident in being able to go through with the sale.

If you are a first-time home buyer then you can check this box off! You have a built-in competitive advantage.

If you have a house to sell, then you do have some options. The first option is to talk with your mortgage banker and see if it is possible to buy your next home without selling your current home. If that is the case, then removing the home sale contingency is far less risky. Other options are speaking to your mortgage banker and finding a friend or relative who may be able to co-sign on the next house which would allow you to carry both properties.

The second option is very risky. That is removing the home sale contingency with your house being under agreement or not even on the market. Very risky. Even if the house is under agreement and you have rock star buyers, there is still risk. What if the buyers on your house lose their job and can’t qualify for a mortgage?

This is an option to talk in a lot of depth with your mortgage banker as well as your real estate agent. It’s important to know all of your risks and understand that you can lose your entire deposit if you are not able to perform. Each situation is different, but it is hard to recommend this option when you can’t perform if the house doesn’t sell.

After weighing the risks, if writing an offer with no Home Contingency is right for you, then this and using some other items on the Chubb Homes Team Buying Power Checklist will help make your offer more competitive.

The Buyer Power Checklist breaks down an offers buying power into three different categories. A buyer's offer will either be in the 'Low', 'Average' or 'High' Buying Power category.

Getting a Pre-Commitment, not a Pre-Approval

A Pre-Commitment can make an offer to a homeowner more attractive and thereby increase the chances of getting your dream home!

In this video, Jeff & Jason talk about the power of the Pre-Commitment and what it could mean for you and the seller. While it is often very hard to compete with a Cash offer, an offer with a Pre-Commitment will give you a fighting chance.

No Seller Concessions

How can I Make My Offer More Competitive? Writing an offer with a Seller Concession will drastically reduce how competitive an offer is. In a competitive situation, if you are wanting a seller concession like closing cost assistance, asking for it in the initial offer phase is most likely not the place to do it.

The most common seller concession is asking for assistance with closing costs. Closing cost assistance is amazing. Essentially it allows you to finance some of the closing costs. And with interest rates so low, it is a great deal for a buyer.

While they are amazing for a buyer, they do signal it as a weakness to a seller. This is why you do not want to ask for them in the initial offer phase. That is if you are looking to win the offer!

The best time to ask for closing cost assistance is after the home inspection. The way to do this is ask to inflate the price and for the seller to give you the difference back. The difference to the seller is very little on a net perspective. So, make sure to offer to make up that difference to the seller!

The risk to the seller is that the property may not appraise for that higher amount. Most likely the sellers will require language that would reduce the price if the property does not appraise for the new inflated price.

There are many tips on how to finesse a seller concession into an agreement in a competitive market. It’s important to know the risks of both strategies which is why you will want to talk to your Real Estate Agent in more detail as each situation is different.

Shorten Contract Timelines

How can I Make My Offer More Competitive? By shortening the contingency time periods, it mitigates some of the risk of the sellers. This thereby make your offer more attractive. In an offer there are a couple areas where a buyer can shorten their timeline. The inspection and mortgage contingencies are the two biggest areas that a buyer can adjust. Other parts of the contract that can be shortened is the Purchase & Sale Agreement timeframe as well as closing.

For the home inspection contingency, a buyer is generally given about a week to perform. The faster this is done, the more attractive it is to a seller as they will have a definitive answer quicker on whether the transaction is going to move forward. If you reduce this timeline, a great idea is to actually schedule the inspection before your offer has even been accepted and let the seller know about the inspection date! Worst case scenario if they choose another offer is that you cancel the inspection.

The Mortgage Contingency is THE most important contingency in the contract. This is the one that protects the buyer’s deposit and the one that generally extends the longest throughout the transaction. Talk with your mortgage banker to see if this is a timeline that you can shorten. A great way to do this is getting a pre-commitment vs. a pre-approval.

While shortening the closing date can be attractive to some sellers, it won’t be to others. The best thing to do here is ask what is the sellers preferred closing date. Then, whatever the seller says… Make it happen!

Cash Buyer - Cash is KING!

How can I Make My Offer More Competitive? It’s true, when it comes to buying a home… Cash is king! Being able to write an offer that is cash is a very big competitive advantage.

To a seller, a cash offer takes a lot of the risk out of the transaction. It in most cases removes the appraisal risk as well as the possibility as to whether the buyer will be able to perform and close on time.

In many situations a seller might even be willing to take an offer price a little less that is all cash then a competing offer with a mortgage contingency. Nothing is 100% guaranteed, but this is as close as someone is able to get in the real estate world.

The Buyer Power Checklist breaks down an offer buying power into three different categories. A buyer's offer will either be in the 'Low', 'Average' or 'High' Buying Power category.

Buyer to Assume City Smoke Inspection

How can I Make My Offer More Competitive? Being a buyer and assuming the duties of the city smoke inspection is a very creative way in making your offer more competitive in this crazy competitive market!

It’s a creative way (creative means not many other people do it!) to make your offer stands out… And it is something that a buyer can do for relatively short money.

In order to sell a house in the state of Massachusetts, the city fire company must come out and inspect the smoke detectors in the property to ensure they are of code. The inspection itself depends on the municipality and costs somewhere in the range of $30 to $50.

The inspection itself is not the tough part. It can just be annoying! We work with a company that will do the inspection and guarantee that the inspection will pass. While not difficult, the inspection process is one of the most annoying steps in the transaction… Especially for the real estate agent!

Large Earnest Money Deposit

More Money Down then Loan Typically Requires

Proof of Deposit and Down Payment

Buyer Knows Seller

Using Conventional Financing

How can I Make My Offer More Competitive? Going Conventional is one of the ways when using the Chubb Homes Team Buying Power Checklist to make your offer more competitive.

Utilizing a Conventional loan or Conventional Financing can be a difference maker in getting your offer accepted. There are many different types of loans that are available to home buyers. Jeffrey and Jason talk about how using a different product other than FHA can increase your chances in getting your offer accepted.

Another topic to discuss with Jason is a loan with a 'Piggy Back 2nd'.

Offer Extended Occupancy (45 to 60 days)

Waiving the Appraisal

How can I Make My Offer More Competitive? Waiving the Appraisal is one of the best (and most risky) ways when using the Chubb Homes Team Buying Power Checklist to make your offer more competitive.

For a seller, waiting for the appraisal is one of the more stressful parts of the transaction. Will the appraiser see the value in the property and agree with the agreed upon price? Because if the property doesn't appraise, then it can ruin the deal in late hours of the transaction. Many times the seller has packed and there are severe hardship to put the house on the market.

This is why waiving an appraisal can be such a powerful tool in a negotiation and ultimately be the reason why a seller picks your offer in a competitive situation. The power of waiving the appraisal is the reason why it is worth two checks towards the buying power of the buyer.

In this episode, Jeffrey and Jason talk about the option of waiving the appraisal and the major risk in doing so. This is an option that should not be taken lightly.

The Buyer Power Checklist breaks down an offers buying power into three different categories. A buyer's offer will either be in the 'Low', 'Average' or 'High' Buying Power category.

Non Refundable Earnest Money Deposit

Order Appraisal Immediately

Personal Letter from Buyer to Seller

Waive the Home Inspection

A High Home Inspection Contingency Threshold

Offer Above Asking

Offer 10% or More Above Asking

Close on Seller's Preferred Closing Date

 

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