Found the Perfect House? How to Write a Winning Offer and Not Regret it!
You've found the perfect house! There's only one problem- you're not alone! Great homes, priced right, attract crowds of buyers in this crazy market. So, what's the secret to writing a successful offer? Experience helping hundreds of buyers successfully write winning contracts has shown us that there are four critical steps to writing an offer with the best chance of winning. Deciding How Much to Offer is the decision that generally carries the most weight with sellers. The strategy we will share here is designed to help you write the appropriate offer that gives you your best chance of winning while minimizing the risk you'll suffer from buyer's remorse after the sellers accept your offer.
As with most of life's pursuits, putting yourself in the seller's shoes is helpful. In a seller's market like we've been experiencing for the past few years, it's essential to draft your offer with consideration for the seller's needs. This series of articles discusses the best ways to write your strongest offer. This first article shares our strategies to help clients decide how much they want to offer.
The process of writing a winning offer begins at the showing. When Hayden and I show houses to our clients, we point out all of the good and not-so-good factors that will potentially affect their enjoyment of the home and its resale value. These considerations should be based on what's typical for the price range and the neighborhoods where buyers are searching. We'll cover this in detail in the following article in this series. The key is that it's important to have perspective about how the house you're writing an offer on compares to the other listings (active and recently sold) in the same area and price range.
When our clients decide to write an offer, we pull comparable sold properties nearby. We generate a recommended offer price range from the comps for our clients to consider. The lower end of the range is the minimum offer price necessary to have a chance at success. The top end of the range is the highest level we believe it's possible to pay and still have only limited risk that the home will be worth significantly less than the offer price in a downturn in the economy. While most economists predict there's not much risk of a significant drop in home prices anytime soon, it's always essential to keep downside risk in mind.
The key to writing an offer that has the best chance for success while at the same time avoiding suffering later from buyer's remorse is to stay within a "reasonable" range based on comparable sales. The challenge is deciding where on the offer price spectrum to offer. A few years ago, when bidding wars in over-the-mountain communities became prevalent, Hayden and I developed a thought experiment designed to help our clients decide on the best offer price for them. We ask our clients to pretend that it's 30 days from today and the home has sold, and our buyers didn't get it. When they imagine seeing the sales price online, we suggest that they consider the highest sales price (within the recommended price range), whereby they'd be disappointed if they hadn't written their offer for that amount. Multiple offer situations make it easy to get caught up in what the other buyers might be offering. We've learned that it doesn't matter whether there are two or ten offers; guessing what other buyers plan to do is just a distraction. The only thing that matters is what the house is worth to you. So, next time you and your spouse are trying to figure out how much you want to offer. Start near the bottom of your recommended offer price range and ask yourself, would I be disappointed if we found out it sold at this level? If so, jump up to a higher level and seriously consider how you'd feel if the house sold at the higher price. Continue the process until you and your co-buyer reach the point where you say to each other, "If somebody pays that much, they can have it!" Then you're ready to finalize your offer. Whether you win or lose, you'll be confident that you did what was in your best interest, regardless of what the other buyers did.
Posted by Mike Wald on