BUYER’S MARKET OR NOT – MAKE IT A STRONG OFFER

Thinking of a deal?

EVERYONE KNOWS IT’S A BUYERS MARKET – RIGHT?

So why isn’t every buyer getting their first choice on their first offer? There are so many buyers out there right now, and everyone is competing for that scarcest of all commodities – the starter house in a good neighborhood! So, what to do? You have to make a strong offer that distinguishes you from the other buyers.

A strong offer is one that sellers will consider seriously; it shows that you mean business and provides benefits for both parties. You want to get the best possible deal on a property you’ve selected, so make a strong offer which is either likely to be accepted or will motivate the seller to open negotiations.

An offer can be simply divided into price and terms (closing date, condition of property, etc. ) - pick one or the other to maximize. Trying to make both price and terms advantageous to yourself will likely offend the seller and make them less likely to negotiate.

A strong offer has the following characteristics:

- A signficant earnest money deposit A sizable earnest money deposit is a good indication of seriousness and shows you are committed to the purchase. Less is a weaker offer, more is a stronger offer. A seller takes a risk when they take their home off the market and a larger earnest money deposit mitigates that risk. Remember that the check is not cashed until the contract is ratified. In addition, you can write the offer with a provision that the check will not be deposited until after the inspection contingency is removed. NB – under Maryland law, the earnest money deposit on a Maryland property cannot be held by the real estate broker if the check is to be held until after the inspection contingency is removed. In that case, the title attorney should hold the deposit.

- A pre-approval letter from a lender or proof of funds for a cash offer to show that the buyer is capable of buying the property. A pre-approval letter or proof of funds for a cash offer is essential. Without it, offers may be rejected because the seller lacks confidence in the buyer’s financial ability to close the transaction.

- A balance between asking for and giving concessions. A strong offer may propose a lower purchase price and balance it with concessions on terms such as a quick closing date (10 days) and accepting the property “as is” without any warranty or repairs.

Conversely, if the buyer needs help with closing costs and wants the property to be in perfect condition when they move in, they can still make a strong offer by giving the seller full asking price with closing costs added on top – assuming that the house is priced at or below market value.

Remember that there are a lot of sellers out there – and not all of them are desperate! There are a lot of buyers out there too, and some of them are desperate to get that $8000 first time homebuyer tax credit. They are willing to write that strong offer that will get them their dream house. Are you?