3 Ways to Make a Compelling Offer for Your New Home

Summary

  1. Escalate your offer
  2. Write a letter to the seller
  3. Get a quick inspection

[Edited transcript]

1. Escalate your offer

Janice:             Did you find the dream home, and you’re not sure if you’re going to win the bidding war? So Number one talks about escalating your offer. [inaudible 00:00:33] on the house you loved, you put in your best offer right away and then with the escalating offer. And then I need a little help with this one ’cause I haven’t seen this put into use over time but what they’re saying is, is you are willing to increase your offer by a certain amount over any bid up to a certain amount. So I’m wondering, is this something that is put into play often? Sounds like a good idea.

Anthony:            I have not seen this myself either. So if I’m understanding correctly, the suggestion is to put in an offer and to tell the seller we’re willing to increase our offer by whatever X percentage, 10% whatever, to meet or exceed any competing offers that come in. I’ve never seen that.

Janice:             Makes sense. No but-

Anthony:            I mean, I think what I’ve seen more often with the great brokers who I’ve worked with in the past is just to keep communication tight and just for your buy side broker to be in close contact with the sell side broker. Just let them know, we have some room to move if necessary. I mean, I may not… it kind of depends on the situation. You don’t wanna give away too much either, you don’t want to overpay if you don’t have to. So a great buyer’s broker will help you understand what type of communication you need to provide to the sell side to let them know come back to me before you accept anything. Without it being so formal as a technical mechanism as we will go up ten percent if we need to. That seems a little, I haven’t seen that.

Janice:             No. In theory it does sound like a good idea, but like you said you’re representation’s gonna know the best way to play that out.

2. Write a letter to the seller

Janice:             You call this a love letter in your book, but spreading a compelling story about the house, or a personal story that will really move the seller to say wow this family should be in this house, they belong here. I have personally done this, I have written the love letter and it worked.

Anthony:            I mean obviously dollars and cents matter to the sellers, but when it gets down to a certain point where it’s between two or three competing offers that are gonna likely be in the very narrow, very close to each other in terms of dollar amounts. It usually comes down to, just imagine, perhaps you’re empty nester and this is the house that you raised your kids in and maybe even had some grandkids in, and you’ve been here for 20, 30, 40 years who knows. For whatever reason you’re prepared to move to Florida or California or Phoenix or wherever. You’re not actually trying to wring every last dollar out of this family home, you might want it to go to another wonderful family. Then give them the opportunity to enjoy and grow a family as you have. Making that connection with a buyer can be huge as opposed to somebody who comes in with maybe an offer that’s a few thousand dollars more, but that intends to build frat house. Nothing against frat houses personally, depending on the situation.

Janice:             I mean, but you are attached to your home, your memories are there. Like you said if they come in at the same dollars and cents, but one says I’m starting a family, it’s going to be you and your family all over again, it kind of gives them a little bit of a wow factor and it does work. It might not always work, but in my experience it did work.

Anthony:            So it doesn’t have to be a love letter necessarily, I mean I think that’s a great idea, but funny story. A friend of mine was going to open houses and because he couldn’t get a sitter he had to bring his young child with him, a very cute young boy. In one case it was a very competitive situation for a house he wanted to place an offer on, but the seller sort of fell in love with his son.

Janice:             Oh gosh.

Anthony:            I think it closed the deal for him, so it was totally unintentional but it worked out. That’s sort of like a baby love letter, I don’t know what to call that.

Janice:             Yeah, complete unintentional, but perfect timing. Look at my cute child, who could resist a cute little boy sitting there saying I wanna live here.

Anthony:            Exactly.

Janice:             That’s actually pretty great. On the flip side of this a little bit is when we were looking for a house we needed a very certain development the way that the schools are set up and nothing was available. So our realtor actually suggested, they sent letters out to people who weren’t even on the market to sell. So we sent this letter like this is how much we love this neighborhood, we need to move in here, if there’s any chance you happen to be considering selling just keep us in mind because we love it. That is how we came to live in the house we do now, it was not even on the market. They loved our letter and the reasoning, and they had been thinking about selling, so of course your realtor’s gonna do what’s right for you, but these letters do work.

Anthony:            It’s a great story, that’s a really good example.

Janice:             Yeah, it wasn’t even on the market, we walked in and we knew this was the house, they knew we were the family. It was just perfect, it just worked.

3.Get a quick inspection

Janice:             Then the lastly is get a quick inspection. What they are saying here is that you would get an inspection before an offer, I’m gonna need a little help on this one because they are even saying it could be a risky move. I don’t have the experience to say whether this is something that is done, but if they’re saying to before you place the bid, get an inspection. What do you think of that?

Anthony:            I’m gonna push back too you for a second because you might the burbs a little bit better than I do.

Janice:             Ah yes.

Anthony:            How much does an inspection cost?

Janice:             Oh, okay. I’m going back a little bit, but it’s definitely 500-ish. That is… it’s been a long time kind of pulling it out of air, but it’s no less than 500. It’s not cheap.

Anthony:            Okay, so I think that’s what they mean by the riskiness of it. You might be out 500 bucks for nothing essentially. There is an equivalent, but that being said if it’s a hot market and 500 bucks could get you the deal you really need or want to get. It might be worth it, so there’s that. They’re as comparable in the city, sometimes… the point is to demonstrate your seriousness to the seller, that you’re willing to take steps that typically only happen after you get into contract. There’s comparable methods of doing that in Manhattan where you either run the title report before getting into contract. That’s typically done after… that’s a couple hundred bucks as well. You can also begin your due diligence, if it’s a condo or a co-op on the building financials, and again that’ll show you’re taking steps to really get ahead of everyone else. So there’s a couple other things you can do, so it doesn’t necessarily have to be about an inspection. It can be showing that you’re willing to do things or you’re prepared to do things that are typically done after a commitment from both sides to show your level of commitment at this point.

Janice:             Yeah, okay that makes a lot of sense. They’re also saying another option is an as is inspection meaning that when you do get the inspection you’re not gonna go back to the sellers and say we want everything fixed. You’re kind of just saying that now we know what it is we’ll take care of it. There’s just like you said a whole bunch of different moves to show them you’re serious, but that’s where your professional is gonna come in. They’re gonna tell you that this is what you should do for this particular house.

Anthony:            I’m not sure exactly what they mean by an as is inspection, but I will say the words as is you need to treat those very carefully.

Janice:             Yeah, yes you do because you never know what that inspection’s going to turn up. Especially in some of the older houses in the burbs have been around since the early 1910, 1920, I mean they’re old houses, so you gotta be careful on that inspection.

Links

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