How to get your offer accepted – not rejected.
Broker's Corner 7.17.2020
1. Get a Pre-approval or Pre-qualification Letter
Arguably one the first and one of the most important steps in the home buying process is getting pre-approved for a mortgage. Without a mortgage pre-approval or pre-qualification letter, a seller has absolutely no idea if the buyer can obtain a mortgage for their home.
A mortgage pre-approval and a pre-qualification are 2 different things. A mortgage pre-approval is significantly more attractive to a seller because there is more in-depth research by the lender for a pre-approval.
If you can’t get a pre-approval before submitting an offer, at the very least get a pre-qualification letter.
2. Submit a realistic offer.
A lowball offer can be very insulting to a homeowner, in fact, it can even offend a seller enough that they will choose not to respond to a buyers’ offer. Buyers need to be educated to the real market value. It’s always a Buyer’s decision what to offer, but if a buyer wants the offer to be considered, it should be realistic.
3. Don’t ask for items specifically not included
Another common reason a purchase offer is rejected is because buyers will ask for items that clearly were not included in the sale. If you’re buying a home and decide you still want to ask for the seller to include the refrigerator, even though the listing agent indicated that it specifically was not included, don’t be surprised when your offer gets rejected.
4. Don’t request seller concessions that you don’t need.
Closing costs are the obvious and most often used Seller Concession. Seller concessions are real dollar amounts paid by the Seller at closing, reducing the Seller’s net. Asking for closing costs, especially substantial closing costs, are one of the top reasons why a purchase offer is rejected. If the Buyer doesn’t really need the closing costs paid by the seller and you are in a hot Seller’s market, consider not asking. Alternatively, offer a higher price that would cover the closing costs. Just remember to consider whether the property will appraise for a higher amount.
5. Offer a strong earnest money deposit
The stronger the earnest money deposit, the more likely the Seller will choose your offer over a similar offer with less earnest money. If it is too low, the Seller may be concerned about the viability of the offer or of the Buyer. Typically, in the Atlanta market, we see earnest money at about 1% of the Purchase Price. Increasing that amount to 2% or 3% may do the trick. In the luxury home market, especially in a multiple offer situation, the earnest money deposit may need to be much higher.
6. Include only the contingencies that your buyer needs and waive any that are not needed.
Almost every purchase offer will have a handful of contingencies. Common contingencies include a home inspection contingency, financing contingency, appraisal contingency and sale or lease of buyer’s property contingency.
Contingencies come with uncertainly for the Seller. The fewer “outs” in the offer, the better for the Seller. However, protecting the buyer client is critical, so don’t give away a contingency that is needed.
If the house is new and the warranties are still in effect, maybe the inspection can be shortened or even waived. Or if the Buyers are flush and know they have the financing, maybe waive the financing. Better yet, if the Buyer can pay cash and waive the appraisal, that deal has a greater chance. A cash sale can be superior to a financed deal at a higher price.
Remember, the offer that gets accepted is the one that satisfies the Seller. So, find out what the Seller needs. Is it an emotional sale or a numbers game? Is timing important? Is the Seller risk averse or risk tolerant? Talk to the Listing Agent and do your best to persuade the Seller to choose your client and not the others.