submitted by dotloop
Veteran Real Estate Broker Karen Schlosser shares her top techniques to make your buyers’ offers stand out in today’s hot housing market
Principal Broker, Vice President, Sales Manager at Comey & Shepherd, Cincinnati, and a real estate veteran with over 40 years’ experience, Karen Schlosser knows a thing or two about writing an offer.
She’s spoken about the technology and techniques on her weekly webinar series, Tech Tool Monday, and mentored many agents on the subject in the Cincinnati and Tri-State areas.
Recently, Schlosser shared her knowledge on a special dotloop-hosted webinar, “How to Write a Strong Real Estate Offer.” In the 50-minute presentation, she explains how various contingencies and techniques can strengthen or, in some cases, weaken the buyer’s offer.
Karen also highlights various clauses and contingencies observed in the marketplace and shares resources to create offers that will stand apart from the competition.
What’s the Buyer’s Level of Risk and Affordability? What’s the Seller’s Motivation?
Let’s face it. Today’s low inventory and strong demand have forced many home buyers to adjust their tolerance level for acceptable risk.
So before you can create a stand-out offer in a tight housing market, you’ll want to assess your client’s level of acceptable risk and affordability.
Ensure your buyer fully understands what they’re agreeing to in the fine print of their negotiations and what they’re willing to live with in terms of a 30-year mortgage.
In addition, you’ll want to determine what will get the seller’s attention. What’s their motivation?
“Writing an offer today is like trying to hit the bullseye on a dartboard while blindfolded,” says Schlosser. “How do you know what the seller wants and is looking for? What’s most important to them? How do you stand out?”
Quite simply, you ask questions. If nothing else, striking a conversation upfront with the listing agent will help you establish communication and build rapport, Schlosser says.
Questions to Ask a Listing Agent Before Submitting an Offer
What is the seller’s most important factor in choosing a buyer?
Maybe the seller just wants to know the buyer they choose is serious and will follow through on their offer, in which case more earnest money may make sense.
When does the seller want to move out?
If they need time, a possession date clause providing a buffer between the closing and possession date could turn the key on the final offer decision.
Are there concerns on either side that the listing won’t appraise for the final offer price?
If so, this could prompt a discussion with your buyer about offering a possible appraisal gap to cover the difference.
There are many ways to grab your seller’s attention; but, just as important as it is to know how to strengthen an offer, buying agents also need to know how to steer clear of clauses that can weaken one.
“As strong as your offer may be price-wise,” Schlosser notes, “you could also be countering it and weakening your position by putting things into the offer that are not to the liking of the seller.”
10 Ways to Make Your Offer Stand Out
In many cases, the winning real estate offer is more complex than just price and closing date. Contingencies, whether waived or modified, will largely influence your chances of acceptance.
In the webinar, Schlosser shares numerous techniques for buying agents to create offers that will catch the eye of the listing agent and seller. Here are a few options, followed by a downloadable client quiz to help you identify the best negotiating techniques for each of your buyers and help make their offer stand-out in today’s housing market.
1. Include an Escalation Clause
An escalation clause is often presented in increments and may be capped or not. For instance, if the high bid is $300,000, the escalation clause may scale up in increments of $2,500 over that high offer with a cap at $322,500.
2. Raise the Earnest Money
Schlosser says she’s often surprised to find so many high offers with generous escalation clauses, yet they fall short on the earnest money. As she notes, it’s not only about how much you’re offering, but also how much you’re not offering in other areas like earnest money. The broker advises offering at least 1% or maybe even 2% of the purchase price. You can step it up further by making the earnest money non-refundable or make an upfront portion of the deposit non-refundable and then pay the remaining balance upon the completion of the appraisal and removal of contingencies.
3. Lift Contingencies on the Loan
In this market, an offer with a contingency placed upon the closing of a buyer’s other real estate will often lose to another offer leveraging a line of equity or a blanket loan, so it helps to free the loan of any strings attached whenever possible.
4. Strengthen the Financial Position
One way to increase the confidence level in your buyer’s loan is to encourage your client to obtain a pre-approval or verification of funds. Schlosser cites several options, including offering to get pre-qualified with a lender of the seller’s choice; obtaining pre-approval by an underwriter on all other elements of the loan except for the appraisal; or using gift funds to fund an appraisal gap and/or increase the down payment.
5. Negotiate the Appraisal
Just recently, the broker had a buyer win a listing by closing the appraisal gap by $20,000. “That was one of the elements that got this offer tipped over,” she says. “In fact, we saw the other offer they beat. It would have given the seller more money – about $20,000 more – but that offer didn’t have an appraisal gap, and because my buyer was willing to gap the appraisal by $20,000, that got the seller’s attention.”
6. Negotiate the Inspection
Buyer’s agents are getting creative with inspections. As Schlosser notes, there’s a range of options, including removing the inspection contingency altogether and taking the property “as is” or offering to conduct inspections and capping the dollar amount of all repairs.
7. Drop Small Repairs and Misc Requests
In a bidding war with 30 offers on the table, buyers might also want to refrain from asking the seller to remove an unsightly outbuilding or make repairs that might weaken the offer. Of course, the decision to forego these elements will largely depend on how badly the buyer wants the house and how much they may need to invest in future repairs.
8. Pick Up the Seller’s Closing Costs
In a faraway market, sellers used to pay the buyer’s closing costs – but not in this market. Today, the tables have turned and the seller’s closing costs have become a negotiable bargaining chip.
Moving costs, too, might be up for grabs. Just recently, Schlosser says she received an offer in which the buyer volunteered a generous amount to pay the sellers’ moving costs.
9. Remove Request For Certain Fees
In addition to dropping the closing and moving costs, buyers can strengthen their position by removing the request for sellers to pay for title insurance.
10. Get Creative with the Closing Date
As noted, timing has much to do with a seller’s motivation, and the move-out date – often a key concern in a seller’s mindset – is no exception. Schlosser offers several options from providing seller occupancy for a period of time with rent paid to the buyer to providing seller occupancy for a period of time free of rent.
Quite simply, sellers don’t want to counter, says Schlosser. They’d rather find the offer they can readily accept. By considering all the terms that will strengthen the offer – and those that may weaken it – you can help increase your buyer’s chances of getting the house, even in a brutal bidding war.
Make sure to watch the webinar to learn all of Karen’s tips and download the free PDF of her client quiz, “How to Write a Strong Offer,” featuring ways to identify the best offer techniques for your buying clients.
Karen Schlosser is the Principal Broker, Vice President, Sales Manager of Comey & Shepherd. She’s been in the real estate industry since 1977, acting as the Director of Administration and later the President of the Cincinnati Area Board of REALTORS®. In her current position, she conducts her own transactions, mentors others and hosts Tech Tool Monday, a weekly webinar series widely attended in the Cincinnati and Tri-State area.
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