Multiple offers are back in the Austin metro area. In fact, every home I have written an offer on so far this year has been in a multiple offer situation. So, how do you make your offer stand out to the seller? While price is oftentimes an important component when a seller is comparing multiple offers, it's not the only factor that affects which offer they ultimately choose. The strength of the offer, the terms that align best with the seller’s goals, and facts about you (the buyer) can also sway the seller’s decision. Aside from offering the seller a higher sales price, here are some ways you can put your best foot forward when competing in a multiple offer situation.
1. Find Out What Terms the Seller Wants
Is the home vacant? If so, the sellers probably value a quick close. If it’s occupied, they may want a lease back or a closing date that’s far enough in the future that they have time to find a new home. Is there a sentimental chandelier that they want excluded on the contract? Does their Aunt Cheryl work at Best Title, and they really want to close with her? There are all sorts of things that a seller may prefer, but you’ll never know what these items are unless you ask. Find out what the seller prefers and do your best to craft your offer to match.
2. Shorten Contingencies
Anytime where the buyer has a potential “out” in the contract is a contingency clause. By “out” I mean the buyer can back out of the contract, and get their earnest money back. There are a plethora of these in the Texas real estate contract, but some of the most common ones are: the option period, the number of days in the third party financing addendum, and the number of days to review the seller’s disclosure. If there are a lot of days in any one of these, i.e. 21 days to obtain full buyer pre-approval, it’s a risk for the seller. If they accept your offer, they could take it off the market for twenty days, and then you could inform them you weren’t unable to get financing approval and you would get your earnest money back. They’ll incur carrying costs and lose time on the market when qualified buyers could have been looking at their home. Minimize all of these contingencies in order to entice the seller to accept your offer.
3. Increase the Earnest Money or Option Money
Increasing the earnest money is one of my favorite strategies to make an offer more appealing to sellers. In our market, most sellers expect to see a minimum of 1% earnest money. Consider depositing twice that or, if you can afford it, ten times that. The earnest money is held in escrow and ultimately applied to the sales price if you go through with it. If for some reason you don’t go through with the purchase, you will get this money back so long as you comply with the contract terms. Increasing the option money is a bit riskier. If you back out of the contract, you won’t get this money back. However, if you are fairly confident in the condition of the home, and you aren’t concerned about potentially losing it, increase the option money too. This will show your serious, and willing to put your money where your mouth is. If you go through with the purchase the option money is still applied to the sales price.
4. Pay for Typical Seller Expenses
Traditionally, the owner's title policy was most often a seller expense in the Austin market. In recent years, this has not always been the case. In an effort to stand out amongst a pool of prospective buyers, more and more buyers are offering to pay for the owner’s title policy. Title policy rates are standard in the state and you should look up how much the policy will cost, before offering to pay for it. If the home is in an HOA, you can offer to pay for the resale certificate and HOA documents. If a survey is needed, offer to pay for this too.
5. Add a Letter?
While the practice of writing a love letter to the sellers is not new, it has become controversial in recent years. These letters often allude to some aspects of the buyers' lives that could potentially put the sellers in a position of violating fair housing laws. Any letter that reveals one of the seven protected classes in the Fair Housing Act (race, color, religion, sex, disability, familial status, or national origin) could come back to harm you rather than help you. BUT, if you can avoid revealing any of these items about yourself, a letter to the sellers could help. I’ve heard of two cases recently in which the sellers chose an offer that was not the highest because they valued the fact that the buyers were going to be living in the home.
Buying a home in the Austin metro area right now is tricky, but it’s not impossible. Having a pro by your side who knows all the strategies is key to your success. If you’re thinking about buying a home in the greater Austin area, contact me today.
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