Last week I outlined 5 things you might be able to do to make YOUR offer the winner in today’s real estate market. Now we are going to look at offers from the perspective of a seller…
What is important to a Seller?
English: “The Flower Seller,” a portrait by photographer Joseph Knaffl, taken circa 1916 at his Knoxville, Tennessee studio. (Photo credit: Wikipedia)
To begin with, keep in mind that each seller is a unique individual (or pair of unique individuals… or company with unique individuals overseeing sales of assets/homes). What tops the charts for one seller might hardly merit a mention with another.
- Timing. This is huge for some sellers. As mentioned before, the longer the time between contract and closing, the more than can go wrong. And what sellers often worry about “going wrong” is that the buyer will simply back out. But there are also considerations that revolve around the cost of holding the house, like mortgage payments, utilities and maintenance. The seller has likely “disengaged” from this home and invested themselves in another. On the flip side, some sellers might need some time here because they still have to find a house. Offering a fast close, but stating that you are flexible and able to meet the seller’s needs may be a deal-maker.
- Financing. First, there is NO excuse to not have a good pre-approval letter. OK, the one acceptable excuse is if you have a “proof of funds” letter and you’re paying cash. If you have the money for a larger down-payment, that might be the deal-maker for you. And at least explore alternative options to FHA and VA financing. FHA or VA may be your best bet… but KNOW they are instead of just assuming. And if you have the liquid cash to make the purchase, talk with your mortgage professional about the option of purchasing with cash and then doing a cash out refi.
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Photo taken in Bodie, California. See file name. (Photo credit: Wikipedia)
Inspections. I expect that any of my buyers will want an inspection. However, if you REALLY know what you are doing, buying a house “as-is” instead of subject to an inspection or “due diligence” period can really set the mood for a better deal with the seller. There are dangers, but they might be offset by the savings.
- Earnest Money. I almost always recommend that a buyer offer up 1% for earnest money ($1000 minimum). Offering up less just doesn’t seem as serious to me. While seldom do buyers lose it unless they do something egregious, it does look better to sellers.
- Price. If you are deficient in one area, you may be able to make up for it in another. I know that isn’t the goal, but it is a reality. You aren’t going to get the best price, while at the same time getting the seller to accept a long closing, riskier lower down payment and loan type, long due diligence period and other non-monetary concessions.
So, let’s put on the Seller shoes…
Your house is on the market, listed at $250k. Sales have been moving along well in the neighborhood, and like almost all sellers, you think your house is “better than average”. Here are three offers to look at. Which one do you think is going to be the winner?
- $230k price. No closing costs. 21 day close. $2,300 in earnest money. No inspection.
- $250k price. $7,500 in closing costs (3%). 45 day close. $2,500 in earnest money. 10 day due diligence period.
- $260k price. $10,400 in closing costs (4%). 60 day close. $1,000 in earnest money. 7 day due diligence period.
I’d love to get some comments as to which offer YOU like most and why.
