A hot seller market is great for the people looking to sell their homes and move on, but it’s a lot harder for buyers trying to get an offer accepted in that hot seller’s market. When interest rates are low and options are limited, there could be multiple buyers jumping for a house at once. How do you make your offer stand out in such a competitive atmosphere?
Your job as a real estate agent is to offer the best value to your clients. You want to give them the edge in any market. Remember that, as a buyer’s agent, you are still working for the same goal as the seller, seller’s agent, and buyer–getting that home sold.
There are many ways to really get that edge and help your client’s offer get accepted above others. Here are the main steps you should take to get an offer accepted in a hot seller’s market.
1. Make an Offer Over the Asking Price
One of the first ways to get noticed is to offer the seller something better than they expected. If your buyer can afford it (and ONLY if they can afford it), make an offer a little above the asking price and catch the seller’s attention.
Keep in mind that you don’t want to over stretch. Don’t go more than your buyer can handle. In the end, it’s a lot better to lower the price point you’re looking for than to try and make an offer beyond what your buyer can actually afford.
2. Get Your Clients Pre-Approved
Of course, pre-qualification is required, but in a hot market, that’s not always enough. Because pre-qualification is only based on information the buyer provides, it can’t be counted on as the final proof of financial eligibility and security.
Getting your buyers to actually apply for a mortgage and get pre-approved is the best way to ensure they stand out in a list of buyers. Make sure they have turned in all documentation and have a guarantee for a mortgage as soon as they find the right house.
3. Write a Personal Letter
Personal letters aren’t completely outdated yet! Sellers may appreciate hearing directly from the person they’re selling to. It can be a nice touch to show sellers your buyers are serious about buying and are people of good character.
Get your buyer to write a letter that they can quickly edit if they need to use it for different sellers. Then they just have to change a few minor details and send it on to the seller they’re negotiating with!
4. Waive Contingencies
If you really want your buyer to stand out, waive the inspection and appraisal. However, make sure your buyer understands that this doesn’t mean that there will not be an inspection and an appraisal.
Instead, this simply means that issues found in the inspection will not be used to cancel a contract and that buyers are willing to make up the difference for a lower appraisal. Waiving these contingencies ensures sellers know you are serious and want the home more than you want a hassle.
5. Leverage Earnest Money
In a typical contract, the earnest money is about 1% of the final cost. To really make a splash in the seller’s pond, bump the earnest money offer up to 3%.
If your buyers are really serious about the home and know they want it no matter what, you can also make the earnest fee non-refundable. Such a guarantee is sure to attract attention. But again, please be sure you advise the home buyers of the risk in doing this.
6. Close the Deal Quickly
To really seal the deal, you’ll need to close that offer as quickly as is humanly possible. In most cases, a market will take around 21 days to close a deal. But in the current market, closing within 14 days is common.
Be sure to work closely with the buyer’s lender to ensure everyone is on the same page and will have no issue closing quickly.
7. Pay the Closing Costs
Offer to pay all the closing costs for the seller. By taking some of the extra fees off of the seller, you can attract the seller’s interest and secure the home for your buyer. It may seem like a lot in the moment, but, in the end, securing your buyer’s home is what is most important. They won’t regret having the house they really want–and if they’re happy, so are you!
8. Offer Favorable Leasing Terms
If the sellers need a little extra time to get out, offer them a month of free leasing to ensure they have time to get packed up and out of there. Make sure that whatever leasing terms you offer, they are favorable to the seller and will provide them the greatest possible benefit as they prepare to move.
9. Make a Clean Offer
Avoid adding on a bunch of contingencies. Cluttering an offer with all kinds of extra requirements is a sure way to turn sellers off of you. Don’t ask them for anything unless you really need it.
And even more important than that–make the offer a COMPLETE one! Do not leave out important disclosures or addendums that go with complete offers. You want to make the best first impression for your clients.
10. Provide an Escalation Clause
An escalation clause specifies that a buyer is willing to go above their initial offer if others outbid them. For example, your buyer could bid $300,000 on a house, but specify in an escalation clause that they will increase their offer to $3,000 above any offer that beats theirs.
Usually, escalation clauses cap at the highest a buyer is willing to go. In this case, your buyer may cap at $325,000. If a second buyer makes an offer for $310,000, great–your buyer can offer $313,000. But if a second buyer offers $330,000, your buyer is out of the bidding because their cap has been surpassed.
An escalation clause is not always the best choice because it can irritate sellers or cause problems if your cap goes above an appraisal price. However, if the market is hot and you’re confident there will be multiple offers, you may want to consider it. It might give your buyer a serious edge if other buyers are not likely to offer above your buyer’s cap price.
Conclusion
Overall, there are a few key points to keep in mind when negotiating in a hot seller’s market.
- Offer Convenience
- Be Flexible
- Be a Great Buyer to Work With
If you make the seller feel comfortable and confident your buyer is capable of buying their home, you’re much more likely to get that offer accepted, no matter how hot the seller’s market.