The Do’s and Don’ts of a Winning Offer on a Home Purchase
One of the things I pride myself on is being easily accessible and available to my clients, other agents, and anyone who wants to have a conversation about real estate. On any given Sunday, you can find me at one of my open houses. It allows me to hear the public’s perception of a listing and keeps my finger on the pulse of this fast-moving real estate market. Often I work with frustrated Buyers who are desperate to know how to get their offer accepted in a price range that is selling quickly.
Recently, I worked with Buyers who wanted to purchase a home under $500,000 in West Plano or Frisco. They had submitted offers on FOUR different properties with a discount agent. Their offers had been passed over every time. Only one of the four had even been countered. The potential Buyers said they were offering either list price or over list, did not have to sell their home to purchase, and had been pre-approved by a reputable lender.
What makes a good offer?
They asked me to look over the offers that had been rejected to see if I could make a few suggestions. I thought it might be useful to make a list of what I look for in an offer on my listings that have multiple offers. First, please understand that everything in the 10-page Texas Real Estate Commission (TREC) contract is negotiable. There is no “right” way to write an offer. These are simply suggestions that I look for as a Listing Agent to protect my Sellers, and have coached my Buyer’s Agents to consider when writing on a high-demand listing.
Let’s say I have generated three offers on one of my properties at an open house. All three Buyers are offering the exact same contract sales price. All three have the same financing terms. What else is the Seller looking for, and how do I help them pick the right offer
If you are trying to get your offer accepted, consider the following:
Play ball and agree to the Seller’s Title Company. This should be a local, well known third party, brand name title company. We do not want to go to a small fee attorney office with one assistant – it takes a village to close a contract!
Do NOT insist on closing with a title company because your brother or dear friend works there. This does not instill confidence in the Seller. Seriously, how third party is that? As the Listing Agent, I need to know that the title company is moving quickly to meet all deadlines and is alerting ALL of us to any challenges along the way. If there is a problem, I need to know they are following every rule in the book and showing no favoritism.
As a Buyer, if you bail on the contract with no legal reason two days before closing – I do not want to be arguing with your big brother at the title company to release the earnest money to the Seller!
High earnest money helps get an offer accepted. This is refundable if you terminate during your option period or within any of the many termination clauses available to Buyers in the TREC contract.
High earnest money makes the Seller feel good.
You’re trying to get your offer accepted- make the Seller feel good! If it makes YOU feel better, start with I% of the contract sales price and then deposit an additional 1% after the option period is completed. Do NOT offer $2,000.00 earnest money on a $500,000.00 home. Your contract is going straight to the back of the multiple offer stack if you do that!
High Option Fee and Low Option Days make the Sellers happy and the Listing Agent have faith in you.
Do you really want this home? Did you walk through the home with several other Buyers at a busy open house or were the Realtor cars lined up and down the street waiting for their appointment time? Do NOT try to tie up this hot property for 12 – 14 days with a hundred bucks. Your bar tab at Bob’s Steak House exceeds that!
So, what is the right number? I don’t know. It depends.
If I have three offers, all are the same sales price, same earnest money, same title company, etc. – the Sellers are going to select the Buyers who offer a $400.00 option fee for 7 days. We do not want to risk selecting a Buyer who has 2 or 3 offers out on different homes with each one having a 10-day option period for $100.00.
Do you have a well known, respected Realtor submitting the offer for you?
Some Buyers think that working with a discount agent will help them make a better deal. You need to know that when I sit down with the Seller to discuss offers, one of the subjects is “what I know about the Buyer Agent’s reputation in the local market”? There are agents known for being difficult, terminating offers days before closing and simply being “not very bright” when it comes to residential real estate. When I have an offer from a professional Realtor, I know that contract is probably going to make it to the closing table with minimal distress.
The previously mentioned Buyers who had lost out on four homes offered low earnest money, low option fee, and a brother at the title company they insisted on using. The good news is – they listened. And it wasn’t long before they were under contract on a beautiful home in Plano!
If you have any questions about the above, please call my direct line at 972-841-3110, I’m looking forward to talking to you personally.
Related Article: “Avoiding the Curse of the Solid Gold Toilet When Selling“