Q: Which Tips Will Help You Make a Winning Offer?
If you follow these six tips, you’ll win the home of your dreams.
Inventory in our Northern California real estate market is as low as it’s been in many years, which means many homes are attracting multiple offers from buyers who are trying to lock in interest rates below 3%. We at the Andrew Lamb Real Estate Team have been busy helping our buyers beat other offers to get the home they want, and here are our best tips and tricks that will help you write the strongest offer possible.
1. Increase your earnest money deposit. Every standard California real estate contract has a section for earnest money, which is typically 1% of the home’s purchase price. (If a home costs $500,000, the earnest money portion would be $5,000). If you can increase your earnest money deposit to 2% or even 3% of the purchase price, that’s a great start to strengthening your offer.
2. Show the seller you’re qualified. There’s a difference between being pre-qualified and pre-approved. A pre-qualification letter simply states that you’ve had a conversation with a lender; a pre-approval letter states that they actually saw your financial documentation (credit score, expenses, debt-to-income ratio, etc.) and know for a fact that you can afford to buy a home. It’s like having a cash offer in hand instead of needing to prove to the seller that you can buy their home.
"Put your best foot forward and don’t wait for a counteroffer."
Another option is to get a TBD approval (‘To Be Determined’), which indicates you’ve already been sent to underwriting, you’re fully approved, and the lender just needs an appraisal and preliminary title report. After they have these items, you can close on the home in as little as 10 to 14 days.
3. Give the seller the closing date they prefer. Have your agent call the listing agent and ask them what they’re looking for. Price isn’t always paramount. If you can offer the seller good terms or, for example, an additional week’s worth of rent-back for free because they haven’t yet closed on their next home, that bodes well for your offer.
4. Waive or shorten your contingency periods. This means the length of time you have to order inspections (17 days by default in California) and fulfill the appraisal contingency. Try shortening the inspection period to 10 to 14 days. If you’ve gotten a TBD approval, shorten your loan contingency from 21 days to, say, 14.
5. Make it personal. Write a letter to the seller so they better understand you and your family’s situation. Our clients have had great success telling sellers how much they love their homes and why it would be a perfect fit for them. Some sellers would rather not know this information, but I recommend going for it anyway since you have nothing to lose.
6. Write your best offer. Our market is extremely hot, and roughly 75% of all listings across the country are getting multiple offers. Put your best foot forward and don’t wait for a counteroffer. Sellers typically don’t want to waste their time, so they’ll likely go with the best offer they see immediately. You probably won’t get any discounts (aside from locking in a great interest rate), so just write your highest and best offer right out of the gate.