10 Agent Tips For Making A Strong Offer On A House
Andrew Dehan4 minute-read
May 27, 2021
Helping clients put together offers is an essential part of being a real estate agent. You want your clients to have a positive homebuying experience.
In a competitive market, these 10 tips will help prepare your clients to make the best offer possible.
1. Check Your Client’s Preapproval And Prequalified Status
Before they start seriously house hunting, your client will need to be preapproved. You need to be able to know the status of your client’s preapproval and prequalification. With Rocket ProSM Insight, you have access to your client’s documents at any time, so you can pull up their approval letter on the fly.
2. Make The Best Offer
In a competitive market, you need to guide your client to make sure they put the best foot forward when they put in an offer. For example, if other homes in the area are selling above asking, you need to coach them on how much they should put in.
With Rocket Pro Insight, you can edit your client’s approval letter when they go to make an offer. This is especially helpful if a home has a sale price lower than what your client is approved for. This way, everything is in order for them to make the best offer possible.
3. Encourage Clients To Write A Personal Letter
Writing a personal letter is a great way for a buyer to market their offer to a seller. Unlike offering more earnest money or waiving contingencies, a personal letter doesn’t cost a buyer anything.
An effective personal letter appeals to the home seller’s sense of their home. To many people, selling a home is more than a transaction – it’s full of emotions and memories. A well-written letter will show how much the client’s invested in the home and the times they envision having in the home.
Encourage your clients to consider using a photo and talk about what they like in the home. Have them be authentic and try to establish a connection with the owner. Your client should highlight the strength of their financing and wrap the whole thing up in a few paragraphs.
In a competitive market, multiple offers are common. Including a personal letter can help your client’s offer stand out. They need to use every tool they have at their disposal. The worst thing the seller can do is reject their offer, which they could have done anyway without the letter.
4. Be Flexible With The Closing Date
Speak with your clients to see how flexible they can be with closing. Generally speaking, if you offer to close quickly, your offer may be stronger. However, the seller may need a longer closing process, maybe to relocate or finish business. It’s best if your clients can submit an offer that has a flexible closing date.
5. Submit A Clean Offer
Submitting an offer with fewer contingencies or with no contingencies is another way to bolster the strength of the offer. An offer can also be submitted to purchase the home as-is.
Notify your client of what waiving a home inspection, home sale or appraisal contingencies could mean for them as there is risk involved. They need to be prepared for what it means if something comes up during the inspection or if the appraisal falls short.
6. Offer To Help With Closing Costs
Traditionally, the seller pays most of the home closing costs, but today’s market is far from usual. Your clients can strengthen their offers by offering to pay all or part of the closing costs.
7. Offer More Earnest Money
Let your clients know that earnest money is the way they can show they’re serious about buying the home. Typically, this would be 1% – 3% of the home’s purchase price.
In highly competitive markets, your clients can strengthen their offer with a higher earnest money deposit. You need to notify them that, if they do waive contingencies and back out of the sale, they will lose this earnest money.
8. Submit Offers With More Cash
In almost any circumstance, cash is going to be king. Obviously, if your client can submit a full cash offer, they should consider it. It can be much more appealing because it can happen faster and financing is secure.
However, most people can’t do that. Even if your client can up their down payment a couple percentage points, it can strengthen their offer. An offer with 8% down looks more financially secure than an offer with 5% down. While it can be a big ask, it could be what sets them apart from other offers.
9. Offer To Cover The Appraisal Gap
In a competitive market, many homes sell over asking price. This can be a recipe for a low appraisal. An offer that says it will cover the appraisal gap is a more secure offer and can mean your client’s offer gets selected.
Make sure your clients are aware of what this means. If they offer $250,000 on a house and it’s accepted, and the appraisal comes back at $225,000, they may not have negotiating power. They may have to make up the $25,000 difference.
10. Consider A Rent-Back Agreement
Many sellers are also looking to buy. This can put anyone in a predicament. Talk to your clients to see if they would be interested in offering a rent-back agreement if the closing date is too soon.
This agreement would allow the seller to become a tenant in the home and live there for a short, predetermined time after closing to give them time to find a new home.
The Bottom Line
Your client has many options to strengthen their offer in a competitive market. If your client is able, they can offer more cash upfront in the form of more earnest money or a bigger down payment.
They can offer to waive contingencies, but you should make them aware of the risks involved. And yes, they should write a letter to appeal to the seller. It’s free and could sway the seller to choose their offer.
Ultimately, you need to be your client’s coach throughout this process. In a competitive market, they need to be aware of what they’re up against. It’s possible they’ll have to submit multiple offers and be flexible. You need to be there through the process to hear their concerns and frustrations.
Utilizing these tips, you’ll be able to help them through to the purchase agreement.
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