Available listings have been down over 30% from 2 years ago. The shortage of move-in-ready listings has created a feeding frenzy that heats up when sharp new listings (the kind our buyers all want) hit the market. Through May, 51% of homes sold in our Southeast Michigan market have sold in 10 days or less. Forty-four percent of sales have been at or above asking price.
As well-appointed premium listings have become scarce in all price ranges, buyers are moving quickly with multiple and over asking price offers.
It often takes two or three painful losing bids before buyers figure out what it takes. Here’s where agent coaching becomes important. Making any offer should start with a conversation with the listing agent to uncover the seller’s hot buttons. It’s not always price.
HERE ARE 10 TOOLS THAT CAN BE USED INDIVIDUALLY OR IN COMBINATION TO HELP OUR CLIENTS WIN THE DEAL.
- Cash Offer—Cash is king and eliminates potential risks perceived by seller. Not everyone has the luxury of paying cash, but don’t overlook this possibility when discussing options with buyers.
- Escalation Clause—This method is intended to squeeze out the competition by offering “$xxx” more than any other offer received. Be sure to include a ceiling cap, or you may run the risk of the appraisal coming in short—our next point.
- Appraisal Waiver—If your client has the financial ability to put more down, the offer might include “not subject to property appraising for value.” Be sure buyer and lender are on board with this prior to making such an offer.
- Extended/Free Seller Occupancy—With fewer homes on the market, sellers may need time to find their next home before they can move. Offering to extend post-closing occupancy, or letting the seller stay for free might sweeten the deal.
- Letter from Buyer to Seller—Building a connection and making the transaction more about the people than the money sometimes helps a buyer gain an advantage. Keep it short, stay positive, and thank the seller for considering your offer.
- Larger EMD—Money talks. Increasing the EMD sends the message that your client is committed. It helps reduce the seller’s risk that the transaction will fail.
- Inspection Waiver—You don’t need to completely waive the inspection if you arrange to have your buyer bring the inspector on the initial showing. Do an abbreviated inspection during the initial showing so it’s taken care of before going under contract.
- Increase Down Payment—The larger down payment reduces risk to the seller that your buyer will run into financing issues while completing the transaction.
- Strong Pre-Approval—The fewer contingencies in the approval letter the stronger it will be. Some preapproval letters have more holes than Swiss cheese. Work with your client and their lender to make sure yours doesn’t.
- Be Likable, Professional, and Easy to Work with— It isn’t always the biggest offer that takes it. Sellers often base their decisions on perceived risk and sometimes because they like that you and your client showed respect when you took your shoes off for the showing.