Best Offers: How to Make Them, When to Take Them

Buying or selling a home is a major life decision. And, while changing residences is a known major stressor even during a typical housing market, in a market as hot as Florida’s, it can be a white-knuckle experience. Whether you are a buyer or seller, you probably know how critical pricing is, and how important a strong offer is in your strategy. But, how do you determine what that best offer looks like. Below are a few tips that should make the process easier, especially in today’s tight market.

How to Make Your Best Offer

In the current seller’s market, a shopper’s full price offer may not be enough to snag that dream home.

Make a no-contingency offer. Contingencies are circumstances that must be met for a real estate transaction to be completed. For example, your offer might be contingent upon you selling your current property or receiving a clean inspection and a strong appraisal of the home you’re looking to purchase. To protect your financial interests, get your loan fully underwritten before making an offer, and see if the seller has or will provide their own inspection through a reputable company.

Don’t ask for personal property. Want the sellers to throw in the patio furniture? Don’t do it. Your offer could be identical to another offer that isn’t asking for these items, and you don’t want to miss out on the home of your dreams because the sellers don’t want to part with their living room sectional. If you absolutely must have certain things, negotiate, and pay for them, separately and only once the sellers have accepted your offer. If the seller says no, don’t push the issue.

Offer above asking price. This one can hurt you in the wallet, especially with housing prices at historical highs, but a seller’s market demands sacrifice. Your offer has to be strong enough to beat out multiple bids. Sometimes offering $2,000-$3,000 more is enough to get a seller’s attention and show that you’re willing to compete with other offers, and it won’t end up costing you much in the long run. The key is to keep your offer in line with the home’s value while still above asking price.

Put down more earnest money. An earnest money deposit shows the seller that you are a good-faith buyer who is serious about wanting to purchase their home. In most cases, the real estate broker will hold your earnest money in an escrow account. This money can go toward your down payment and closing costs. Generally earnest money is about 1-3% of the home’s purchase price. Putting down a larger amount will show that you are a serious buyer with good intentions.

Make a larger down payment. Offering to pay more down is a strong sign to the seller that you are a serious buyer.

Add an escalation clause. This means that your offer will outbid any other offer up to a maximum price. If you decide to go this route consult with a real estate lawyer before submitting your offer. Your real estate lawyer should be the one who writes this clause into the contract.

Pay with cash. This can be a smart move in a seller’s market, making your offer look more appealing to a seller who wants to finalize a deal quickly.

Write them a “love letter.” Including a personalized letter with your offer might sway the seller in your favor. Presenting yourself as a person just like the seller who loves the home as much as they did and will take care of it can go a long way. Some sellers attach a lot of sentimental value to their homes, and this will make them feel at ease knowing they aren’t selling to a flipper looking to gut all the home’s charm just to make a quick buck. It might not help at all, but it can never hurt.

Know When to Accept the Best Offer

As a seller, you naturally want the best purchase price you can get, but the best offer isn’t always the highest. Here’s what to consider when fielding offers.

Know your bottom line. Understand the real time current value of your property. The quickest route to determining your lowest acceptable offer is to check the comps of other similar properties in the area. Your real estate agent will have that information and help you use it set your number relative to the current market value.

Consider the economy of your timeframe. Give yourself a selling window that supports your situation. If you are pressed for time, or your property has gone on and off the market, you may want to take the first offer that is close to the market value. Additionally, a cash offer can give you the confidence of spending your valuable time with a fool-proof fiscal transaction, as well as helping the deal speed through closing. On the other hand, if you can afford a long selling window, you are in a good position to hold out for your asking price, with the possibility of even higher offers coming in.

Look for any contingencies. A buyer who doesn’t want an inspection or appraisal, and already has financing, is going to look more serious than another potential buyer who requires that these contingencies be met. Fewer contingencies mean fewer chances for the buyer to back out.

Keep your emotions off the table. Homeowners often develop sentimental attachments to their properties, but this is a business transaction. Buyers don’t care that it took you two years to fastidiously design and build your pagoda—the value is set by the market, or that you need to sell because of a death or divorce. Don’t let your personal feelings about the property cloud your judgement.

Enjoy Peace of Mind Throughout the Process

Buying and selling a home is a big decision. These guidelines are designed to make it easier to map out a plan for pricing a property correctly if you are the buyer, and thoughtfully reviewing offers if you are the seller.

And, as in any type of real property transference, we highly recommend retaining a real estate lawyer to look after your best interests. In addition to knowing how and when to make changes to your real estate contract throughout the process, your lawyer will review all documentation, as well as oversee the entire procedure, including the dates for the review period, inspection, and title search.

Contact Florida Bar Board-Certified Attorneys David E. Klein, Esq. and Guy Rabideau at Rabideauklein.com. They have the expertise and experience you need to ensure that your interests are protected throughout your real estate transactions in the Town of Palm Beach, across the Palm Beaches and throughout Florida. Contact Rabideau Klein today to discuss the legal implications of your Florida property transactions.

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