Making a winning offer

In This Article

In today’s support article we’re going to be discussing making a winning offer, including tips and recommendations for strengthening an offer

Please note: If you’re searching for instructions on how to make an offer, please visit support home > how to > how to make an offer or simply click here. Let’s get started!



“You will get all you want in life, if you help enough other people get what they want.”

- Zig Ziglar

NEGOTIATION MASTERY

While applying the quote above to making a winning offer may seem counter intuitive, ultimately this is exactly the mindset we encourage all home buyers to foster and cultivate.  At the heart of negotiation mastery is making any transaction a win-win for everyone. Oftentimes buyers and sellers believe they’re competing against each other but this isn’t the case. Both parties goals are the same which is the transference of real property. To simplify the current home owner wants to sell their home and the home buyer wants to buy their home. Understanding that both parties share the same goal is what ultimately contributes to the overall success of your offer.


PRACTICAL TIPS 

  • Do not make low-ball offers

A low ball offer is where an offer is made for a significantly lower price than what the seller is asking for. For example: A home is listed for 349,000, a buyer makes an offer to seller to buy the home for 300,000. Low ball offers can insult the current home owner and push them to not entertain a higher more reasonable offer from the same buyer. A reasonable offer that isn’t considered a low ball offer would be 5-$10,000 less than asking. So in this example a reasonable offer besides asking price would be $339,000. 

  • Book at least one showing before making an offer
While it’s recommended to book two showings to the same home before manning an offer, it’s highly recommended to at least book one showing. While you may know the neighborhood and that you want to buy the home apart from the obvious benefits of booking a showing and visiting the home, this will also lets the current home owner know how serious are. 

CONTINGENCIES

There are three main contingencies in real estate
- Financial contingency
- Appraisal contingency
- Inspection contingency
While contingencies are designed to protect the home buyer they also give the home buyer ways to get out of the contract. The more contingencies an offer has the more hurdles the current home owner believes have to be overcame. They can also increase the time it takes to close. (Please note: this article is not intended to suggest which contingencies a buyer should or should not include and it’s soul purpose is to educate readers.) 
What are contingencies and how do they apply to real estate offers? Let’s start with a financial contingency. 
- A financial contingency means if a buyer is unable to obtain the financing/funds to purchase the home then they can terminate the offer without penalty. 
- An appraisal contingency means if the homes value according to a home appraiser ie. A professional that determines the value of the home. For example a buyer agrees to pay $350,000 for a home. An appraiser goes to the home an d determines that the actual value of the home is $340,000. If the buyer making the offer and seller aren’t able or willing to renegotiate the price then the buyer can terminate the offer without penalty. 
- An inspection contingency means that if after s home inspection a buyer decides there are issues they were made aware of they weren’t originally aware of that they can, if a resolution between the buyer and seller isn’t made, the buyer can without penalty terminate their offer. 
While the least amount of contingencies are the most favorable for a home seller it is often times the most risky for a home buyer. Additionally, some contingencies are required in certain circumstances such as the appraisal contingency and financial contingency if the buyer is financing the purchase ie. Going through a lender or financial institution to obtain a loan to buy the home. If you’re a buyer financing your home loan and need all three contingencies, relax, the vast majority of homes purchased without contingencies are for homes that need a tremendous amount of work and/or tear downs. Typically these homes are purchased by investors and while it’s possible you could end up competing with a no contingency offer, chances are the homes you’re in the market for will be different than the homes investors are in the market for. 

ADDITIONAL TIPS (please note: the tips below are indirect tips to make your offer stronger.)

Be responsive, while this may not make your offer better, if the current home seller has received multiple offers that are similar they may simply accept the first one, or the one that accepts their counter offer quickly. 
If the home needs repairs it is better to only request for the repairs that need to be made and not items you simply wish the home included. 
If you ask for repairs to be made it is better not to also ask for the price to be lowered. It is a better practice to ask for one or the other. 
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