What Makes A Good Real Estate Offer?
Monday Jun 28th, 2021
The market right now is competitive...and this can be intimidating and overwhelming but being prepared and doing your research beforehand is the best way to go into the process guns-a-blazing! Offers are legal documents which specify the price you are willing to pay, any details about financing, and any conditions, exclusions/inclusions you want before closing.
There are two different types of offers - firm or conditional. A firm offer is more attractive for the seller because it means that the buyer is prepared to purchase the home with no conditions (this usually makes the process easier and quicker!). On the other hand, a conditional offer means that the buyer has some conditions that need to be met before the purchase is made (often things like a clean home inspection, making sure their existing home is sold ). Your real estate agent and the seller's agent usually do most of the work and are always present for any questions/concerns.
As a listing agent I have had a lot of experience with sellers, and I know what they want to see and what will seal the deal in the end. I have seen it ALL and now I am spilling my secrets to you! Follow these tips and you will be armed and ready to make a firm, fair, educated and clean offer. With my tips you will feel CONFIDENT that you have put in the best offer for you.
Ready? Here are my top tips:
Know the Psychology of Negotiation!
Buying and selling a home causes a roller coaster of emotions. It is such a personal transaction! If you are listing, this is your HOME that you are selling. There are often memories, personal investments and finances involved. If you are buying, it can be equally as emotional. You want to be able to visualize life in this home, but not get too attached in case you lose it (which happens often in a sellers' market). It can be very emotional and that can make people make CRAZY decisions! So, my advice is to STOP, take a deep breath and learn a few fundamentals in the art of negotiation.
Visualize the process. It seems a lot less scary if you have gone through the process a few times. Ask your realtor to play out the whole process with you so you feel more comfortable and know what to expect.
Try to leave emotions out of it. That’s really hard to do but ego, competition and rejection can make you act out in ways that are NOT in your best interest. At the time of putting in an offer, leave the emotions at the door (temporarily).
What do THEY want? You know what you want but what does the other party want? 9 out of 10 times they want a clean offer that minimizes risk. If your offer makes them feel comfortable and confident, you are going to have a better chance of having it accepted.
The next tip I have is to really go above and beyond on getting your financing in order. This is a monetary transaction, at the end of the day, and the sellers want to minimize risk.
Get a firm pre-approval, NOT a prequalification. If you can waive a condition of financing, your offer will be more attractive because it is minimizing risk to the seller.
Have a deposit check ready. This helps to show your intentions. You will need to get this organized with the bank beforehand so that you have the funds ready, and they can be released right away.
A letter from the buyers to sellers is also something I recommend. Remember, there is emotion here and many buyers don’t want to give their home away, they want to know that someone will continue to care for it the way they did. A letter can do just that! You can include things like why you love the property, some personal information about yourself that can allow the seller to relate to you, addressing the seller by their name, and reaffirm your genuine interest in their property. Making sure this letter is concise and to the point, and not TOO filled with emotion can help you gain the trust and friendship of the seller and give you a step up if there are multiple offers!
To quote Kenny Rogers; “You know when to fold them, know when to hold them, know when to walk away, know when to RUN!”
These words are so true and are exactly how you should approach negotiating the price. You will come up with a few price options with your realtor, and it's possible that you may come in lower than the offer price because, with good research, you will be able to see that the house is being over-valued.
Another option is to come in right on the ask when you know that the home has been listed fairly. The last option would be to go over the asking price to ensure that you come in strong and match any other offers. In all of those scenarios you will need to have some flexibility in case there are counteroffers. So have an idea of the lowest and highest bids and stay FIRM. Remember, emotions are at the door! Write down your top price on a post-it and don’t move if you really can’t afford or were not willing to go higher the night before. Be very confident in the price and know where you are willing to compromise before going into any negotiations. Be honest with your realtor and SPEAK UP!!
Good communication from an agent is imperative. It’s not just important between the agent and client, but ALSO between buying and selling agents. Both agents are there for one thing, to get a good deal done that leaves both parties happy. The sooner the communication is open, the better and faster a deal can be made with the best outcome.
There are a lot of things that go into curating a good real estate offer, but your agent is here to help! They have gone through these steps countless times and have studied both the psychology and the legalities of these processes, so you can be sure you are in the right hands! If you are thinking of purchasing or selling a home and are feeling a bit daunted by the tasks you’re facing, don't hesitate to contact me, Myka, at (905) 977-8385 or visit my website for more info!