Q: What things do sellers consider as attractive terms when considering an offer?
A: As a buyer, figuring out how to prepare an offer on a home is usually not a simple process. And trying to make sure the offer is according to terms acceptable to the seller can be the most taxing part of the offer preparation process. Then, the offer still faces further challenges to ensure it is appealing as possible for a seller to accept it. Your Realtor will help guide you in making decisions on formulating a great offer to a seller.
A seller will find your offer more attractive if the buyer submits a mortgage preapproval letter with an offer. This proves your seriousness as a buyer. It documents the fact that you have worked out financial arrangements and have eliminated obstacles that could come up in the mortgage loan application process. Also, it proves that you are buying a home within your financial capabilities. Having a mortgage pre-approval letter in a multiple offer situation will stand out against another buyer’s offer, as well.
Another important thing to consider is to avoid making low ball offers. Even in the current buyer’s market in our area, homes sold in our area are selling at 96 percent of listing price at closing. If a home is properly priced, there should be little room for price negotiation. You should always examine recent comparable sales and confirm that the property is properly priced prior to making an offer. Ask your Realtor for comparable home sales to substantiate the list price of the home and the price you are willing to offer. Also, if you are asking for sales concessions such as closing costs, home warranty or other seller paid items, you should make sure your offer is more in line to the full value of the property.
Keep the offer simple and clean of detailed requests or contingency. The initial offer is not the best time to address every repair needed for the home. In other words, try to avoid asking for repairs at the time of the offer and simply make sure you have an inspection contingency in the offer. This will allow you to concentrate on the essential financial terms of the offer and then deal with inspection and repair issues after the offer has been accepted.
A buyer should show their seriousness in an earnest money deposit. Putting forward a reasonable amount of earnest money is a primary concern of any seller. There is no definite or customary amount to establish a level of seriousness, but you could use one percent of the offer price as a serious amount. Thus, for a $150,000 offer price, $1,500 would be an earnest money amount to consider. Keep in mind you are asking the seller to take their home off the market, requesting repairs to be completed at the time of inspections and to pack up and get ready to move by closing date, in most cases. A seller wants to see you are at risk if they abide by the terms of an accepted offer and you change your mind.
Also, a simple personal letter or statement revealing your true intentions as why you want to buy the seller’s home can go a long way. Mixing a bit of personality with the business deal of the offer may actually be to your benefit. Sellers tend to be interested in the personal side of the buyer. Likewise, communicating with the seller on a friendly tone should prove to be beneficial and make the seller comfortable dealing with you.
Get answers to questions you might have about real estate from Randy Durham, who is president of the Chattanooga Association of Realtors and a broker with Keller Williams Realty. His column appears on Sundays. Send your questions to Business Editor John Vass Jr. at jvass@timesfreepress.com