Do Sellers Always Pick the Highest Offer?
The highest possible offer is always the best when it comes to purchasing a home. Do sellers always pick the highest offer? Surprise! Surprise! The answer is often “no”.
It doesn’t always work out that way. A seller may want to be offered a large sum, but a good agent will tell them that every offer is just one part of the whole.
Cash is more affordable than higher-priced offers. Although it may seem impossible to finance such large purchases, many do.
RealtyTrac reports that 43% of home sales were made in cash transactions in 2014. Because there is no need to deal with mortgages or lenders, all-cash buyers are able to close escrow faster and don’t have appraisals.
Preapproval letters are the letter that you have received from your bank or mortgage broker confirming you are ready to purchase within a certain price range.
The preapproval letter basically turns you into an instant cash buyer since mortgages are more difficult to find these days. While other buyers may still offer a better deal, even if the buyer is not preapproved you might have an advantage — at least for a lower price.
The closing period typically lasts for 30, 45, 60 or 90 days. A seller may prefer a shorter closing period to seal the deal than if they receive a better offer. Sellers are very particular about fast closings. Usually, they want them to close within 30 days. You may be able close if you’ve got all the ducks in order.
There are exceptions. But what if the property they are interested in buying isn’t ready within 60 days? Sellers will require more time. The sellers will need more time to find out their needs and offer them the item. This tactic has won me many low offers.
You think that this plan is too cheesy, I’m sorry. Listen, a friend of mine put three identical offers on the table while he was trying to sell his house. Two of these offers were accompanied by very sincere letters. The buyer didn’t write a letter to him, but the other buyers did. This actually made the seller feel uncomfortable. He sold the small piece of paper to one of his letter writers even though it was slightly less than the other buyers’ offer.
Although a letter might not be enough to get the deal, it is important that you pay close attention to market trends. Your house hunting days may be prolonged if your offer doesn’t contain one.
You have the option to leave without consequences by using contingencies in your negotiations. Most common contingencies include the inspection, financing and appraisal.
Each contingency can have the potential of making your offer appear weaker. They could also make it more difficult to close the deal. Before you add any contingencies to your offer, make sure that they are necessary.
Conditional upon inspection: Experts suggest skipping inspection to increase the value of your offer. This is my recommendation: Never give up on this one. Give the seller your problems and offer to correct them. You can leave if the seller refuses to comply with your demands. If you refuse to sign this agreement, it is a big risk. It is better to shorten the timeframe. You can offer to complete the inspection within the first few days of opening escrow. Also, you will respond to inspection results in a matter of days.
Condition upon financing: This is another contingency that you shouldn’t omit unless your payment in cash. You will need to wait 17-21 days for your mortgage approval with most closings that take between 30- and 45 days. This financing contingency will be less difficult for sellers if they have a preapproval letter.
Based on appraisal: The house that you fell for might not appraise at the price you offered. If you have done all the research and analyzed the comparables to your offer, you may consider waiving it. However, there is a downside. You will have to pay the difference in the sales price. This contingency could give you an advantage over your competition, especially in hot markets. Sellers: What was it that got you to say yes to an offer? What are the most common tactics used by buyers in your area to close the deal? Comment below to share your experiences!
