The past year has presented us with many new normals. In the real estate market, our new normal has been characterized by multiple offers, low inventory, and record breaking prices with the average home selling 2.6% above asking, the highest on record according to Redfin.
Buyers are getting turned down again and again...and again. In an effort to help win their client the deal, agents are pulling out all the stops with some resorting to extremes—waiving home inspections and appraisals and incorporating escalation clauses. As a real estate agent, knowing how to handle these multiple offer situations on both sides of the table is pivotal to providing the highest level of service and care to your clients.
So how, in this red hot real estate market, can you make your buyer’s offer stand out in a crowd of strong offers? Today, we’re answering this question by exploring a few tried-and-true tactics and some more unconventional ways to help seal the deal for your buyer.
Keep a pulse on the market
Any top agent will tell you that understanding the ins-and-outs of your local real estate market is a must. And today, with 10, 20, and sometimes 50 plus offers on a home, it’s more important than ever.
Today’s market landscape is rapidly changing, and if you want your buyers to have a shot at a winning offer, your knowledge of the market has to be top notch. Fortunately, there are a few ways you can bring your understanding of your local real estate market up to speed:
Network with other agents
Network, network, network. Develop relationships with other agents in your brokerage and outside of it. Join Facebook groups for coming soon properties in your area. Reach out to listing agents who frequently have listings in your buyer’s ideal neighborhood. Let them know what your buyers are looking for and ask them if they have any upcoming listings.
Always keep the lines of communication open, especially as pocket listings become more common. Recently, Redfin sighted a 67% increase in homes sold that were not marketed to the public since November 2019. Because of stats like this, it’s vital that you proactively network with agents and stay in the know, or you risk missing out on the perfect home for your buyers.
Watch market trends closely
In addition to continually networking with other agents, it’s imperative to stay in tune with the ebbs and flows of the market. The key to doing this is finding reliable data sources and regularly checking in so you have the most up-to-date market statistics.
You’re probably already receiving housing market reports from your local MLS association, but these reports are usually only released on a monthly basis with data from the previous month. To receive more relevant data, dig further into the MLS data on your own or subscribe to weekly housing market reports.
By gaining an in-depth understanding of what’s going on in your local real estate market, you can use your knowledge to craft an even stronger offer that puts your buyer ahead of the competition.
Know the seller’s motivation
As we’ve already witnessed, knowledge is power, but understanding your local market is just the foundation to building a better offer. In order to write the best offer possible, you need to understand what’s motivating the seller.
Do they need to sell fast due to a job location, a new baby on the way, or some other reason? Are they in the process of closing on another home and looking for the flexibility to stay in the house after closing? Understanding the why behind the sale can help give you a leg up against other competitive offers.
Although every agent should do their due diligence before writing their offer, not all of them do—don’t be that agent. Give the listing agent a call and see what you can learn about the seller and their needs, wants, and desires. Any insight you can gather like the seller's preferred closing date or if they prefer a leaseback could be just what you need to craft a winning offer.
Show your buyer is financially able
In this market, highest and best is the name of the game, but what do you do if highest and best isn’t enough? Providing a strong initial offer price can open the door, but it may not be enough to ensure your buyer comes out on top. Here are a few other ways you can prove your buyer’s financial health and further set them apart from the competition:
Get the pre-approval
Gone are the days where a pre-qualification letter was all you needed to prove your buyer’s financial stability. In today’s market, it’s simply not enough to set your buyer apart from other well-qualified buyers. Instead, make sure your buyer is pre-approved, which entails a more in-depth lender review of their finances, and include the pre-approval letter with your offer.
Provide proof of funds
If your client is buying a home in all cash or they've decided to waive the appraisal contingency, then the seller will want to know that your client has the cash on hand to back it up. In the case of a waived appraisal contingency, where the appraisal could come back lower than your client’s offer price, your buyer will need to show the seller they have the funds to pay the difference.
Up the earnest money
Another way to show the seller that your buyer is serious about purchasing the home is to offer a higher earnest money deposit. Because your buyer loses this money if they decide to back out of the deal, a higher earnest money signals to the seller that your client is willing to up the ante and put some skin in the game.
In some states, your buyer can also leverage the additional earnest money section to provide additional funds after the inspection, further proving to the seller that they’re committed to making the deal happen.
Increase the option fee
Although option fees are not found in all states, offering a larger option fee is yet another way to set your client apart from other offers. Since this is money the buyer won’t get back—unless the contract is terminated during the option period—it shows the seller that your buyer is serious about the purchase and has the money to back it up.
Tried these tips and still losing out to other offers? Take a note from this next tip to further boost your buyer’s financial appeal.
Get creative with cash
Cash is king, but in reality, most buyers aren’t in a position to pay for a home without any kind of financing. Fortunately, there’s one way in which non-cash buyers can level the playing field with all cash offers.
A new wave of companies like UpEquity are making it easier for well-qualified buyers to submit stronger, all cash offers even when they don’t have the cash on hand.
How does it work? Your buyer will go through an in-depth approval process enabling them to write an all cash offer backed by the company, meaning no financing contingency and a quicker close. For sellers, this means less overall risk since the buyer's offer is guaranteed with no chance of their financing falling through. It could be just what your buyer needs to outcompete the others.
Minimize seller stress
Selling a home can be stressful. Dealing with showings, not knowing if the deal is going to fall through, preparing to move—and oftentimes sellers are doing this all while trying to buy another home themselves. If you can find creative ways to make the process easier for the seller and incorporate those into the offer, you’ll ensure your buyer’s offer has a chance in the running.
If you’re looking to reduce the seller’s stress, try a few of these tactics when writing an offer for your buyer:
Shorten the inspection period
If you’ve worked with sellers before, you know just how nerve-wracking the process can be. The inspection period only heightens the seller’s anxiousness. Now, we don’t recommend waiving the inspection period completely, but by shortening the timeline, you can reduce the time the seller has to spend wondering whether or not the deal is going to proceed. If you do end up waiving the inspection period, be sure to disclose the risks of doing so to your client.
Be flexible with the timeline
Aside from a high offer price, flexibility in an offer may be the next best thing. How can you ensure you’re writing a flexible offer? For starters, work with the seller’s timeline. Try tailoring the offer to their preferred closing date or provide an optional leaseback for little or no rent.
Limit contingencies
For a seller, contingencies mean more opportunities for the buyer to drop out of the deal, which translates to greater risk. Including contingencies like a home sale contingency or financing contingency should be avoided if at all possible. The more contingencies, the more likely the seller is to skip over your offer in favor of an offer with less strings attached.
Throw in additional incentives
Get creative by offering other seller perks like covering some of the seller’s closing costs. Avoid at all costs asking the seller to pay for the home warranty, title, or any closing costs for your buyer. Unfortunately, requests like these just won’t fly in a seller’s market. Instead, incentivize the seller by offering to pay for the title policy, HOA transfer fees, and survey fees, among others.
The bottom line: if you’re only focused on price when writing the offer, you could be missing out on other unique ways to make your offer more appealing, and that would be a disservice to your client.
Make it personal
Selling a home is not only stressful, but emotional too. Oftentimes, sellers have spent at least several years in a home, all the while making memories and hitting different life milestones. While there’s no doubt that price is an important factor—if not the most important factor—in a seller’s decision to choose one offer over another, it never hurts to try to tug at their heart strings.
Yes, sellers want to get the best deal for their home, but they also want to know their home is going to be in good hands. That’s why it’s a good rule of thumb, especially in a competitive market like today’s, to always have your buyer include a personal note to the seller.
In it, they should tell the seller their story, why they want the house, and what it would mean for them if they got it. Just be sure that your buyer understands fair housing laws, so they don’t unintentionally violate these laws in the process.
When it comes to submitting a winning offer, it’s not always all about the buyer, the professionalism—or lack thereof—of the agent representing them matters too.
Make a good first impression
A strong, well-crafted offer is the basis for winning the deal, but there’s no doubt professionalism can help make the offer a little sweeter. You’ve likely had a less than pleasant experience with a cooperating agent at least a few times in your real estate career. Not only does a difficult agent make your life harder, but they can also jeopardize the deal.
So how can you ensure you’re representing yourself and your client in the best possible light? Here are a few rules to follow when working with another agent:
Be respectful and professional
Even before your client decides to put in an offer, always ensure you're putting your best foot forward. When touring properties with your client, be on your best behavior (and make sure your clients are too). With smart homes being more common, you never know what device might be listening in on or recording your conversations. A good rule of thumb: you and your client should never say anything inside the seller’s home that you wouldn’t say in front of them.
Follow the offer instructions
There’s a reason the listing agent included specific offer instructions. If you’re trying to make the best impression, then there’s no reason you shouldn’t follow them. Read the offer instructions and follow them to a “T.”
Pay attention to the details
Presentation is key. Take the time to diligently review the offer before submitting it to the listing agent. Comb through it to ensure there are no spelling or grammatical errors, or any other kind of mistakes. These types of missteps can leave the listing agent with a bad taste in their mouth and unintentionally put your client’s offer in jeopardy.
Be a good communicator
Be easy to get a hold of, respond in a timely matter, and communicate openly with the listing agent. Don’t be afraid to pick up the phone. After you submit the offer, follow up with a call to the agent. By doing these things, you’ll help build trust and a good rapport with the cooperating agent.
Don’t hesitate
Last but not least, don’t wait. Low inventory and high demand means houses are flying off the market. Not only does your buyer need to be ready to pull the trigger, but so do you. At the moment your client says “let’s go,” you need to jump into action to get that offer submitted as soon as possible. Time is of the essence.
Fortunately, Jointly’s offer management platform allows you to draft and submit a competitive offer in a fraction of the time. Our intelligent offer builder automatically pulls in the complete contract set, pre-populating fields with MLS data, so you can speed up offer submission and win your clients their dream home. Start drafting your offer with Jointly for free.
