Anyone with their finger on the pulse of Texas real estate knows that we are in the midst of a hot seller’s market. Anxious buyers are making generous offers in a desperate attempt to buy a home. However, an offer well over the asking price is not always enough to win the right to buy your dream home.
Let me pose a unique perspective to our readers and potential buyers. At the title company, we see the winning contracts. The buyers whose offers are rejected never make it to the title company.
The successful contracts in today’s market share a few common characteristics that potential buyers may want to note. If you want to win in this competitive market to buy a house, consider these tips:
1. Keep it simple.
Make your offer clean and with just a few, short contingencies. Contingencies include financing, inspection periods, right to object, etc. Any contingencies should appear reasonable and easily attainable. Most of the contracts I am seeing have short option, financing, and objection period contingencies. In this market, you won’t have much luck including a contingency such as the sale of another property.
2. Close within a reasonable time.
Ask the seller when they want to close. Then check to see if your lender can meet that date. Most lenders require 30 days or more. The longer the time to close, the more risk to the seller. Too many things can go wrong that the seller has no control over. The buyer could lose their job or change their minds. Acts of nature can occur (remember the deep freeze of a couple of months ago?). Many savvy sellers want to narrow the time from contract to closing.
3. Provide proof of financial ability.
Knowledgeable sellers often realized that a verifiable buyer might be a better proposition than a questionable buyer making a higher offer. The buyer should show documentation that they have the financial means to pay what they are offering. They should already be pre-approved for a loan at the terms they are offering.
As is often the case, cash is king. When there is no lender involved, concerns about appraisals and financing are gone. The lower the buyer’s cash down payment, the higher the likelihood that the financing may not materialize.
4. Put down substantial earnest money and option fee.
This is a reflection of the buyer’s commitment. The option fee enables the buyer to essentially take the seller’s house off the market for a period of time. Once all parties sign the contract, it is unavailable to other buyers. The buyer should offer enough to the seller to make it worth it.
While earnest money can be any amount, it also reflects the buyer’s sincerity and ability. It can be concerning when a buyer offers a contract with a substantial down payment but the earnest money they are offering is a small fraction of the down payment.
5. Write a love letter.
I am not a fan of cover letters but I’ll admit that they sometimes help. Nothing said in a buyer’s nice cover letter is binding. Some sellers, like myself, feel that everyone’s money is the same color of green. They don’t care about a sappy story. However, people are emotional beings and sometimes a sweet letter can tug at the heartstrings. If a buyer’s agent thinks it will help them, why not give it a shot?
6. Make it easy for the seller.
Many contracts today provide a temporary lease back to the seller that allows them to move out a few days or even weeks after the closing. Some allow them to take specific fixtures with them. A buyer may offer to purchase a pool table or piano that the seller won’t be using at their next house. A buyer perceptive to the seller’s needs will find themselves a step ahead.
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