How to Get Your Offer to Rise to the Top!
With low interest rates & inventory and high demand from buyers, homes in Los Angeles, especially outside the city are seeing multiple offers in today's market. Recently our clients made an offer on a home in Woodland Hills against 24 other offers!
So how do you make your offer stand-out in a sea of offers?
There are many different approaches and ways to make your offer rise to the top.
Below is a list of some available terms. Along with terms, another way is to pay for some of the costs that are normally paid by the seller, which can make an offer more attractive (aside from the purchase price which remains the most important item, of course).
These terms/costs can be offered in the initial offer or in a counter offer. In my experience, offering these terms is more impactful in a counter offer as they will be more fresh in the seller's mind but of course there is never a guarantee to receive a counter offer. In today’s competitive market, going strong from the get-go is one way to make the seller consider not even countering other offers:
Increase the down payment percentage (from 20% to 25 or 30% or more): This can help you in two ways. One it gives more confidence about possibly removing the appraisal contingency (very common these days) and two it will make the seller feel more confident about your loan being fully approved and closing escrow.
Remove the appraisal contingency (MID to HIGH Risk: You might have to increase your down payment if the property appraises below the agreed price)
Remove physical inspection contingency HIGH RISK not recommended unless it's a tear down.
Reduce the inspection contingencies and disclosures review time period LOW RISK An easy way to raise your offer profile, if schedules allow it.
Remove or reduce your the loan approval contingency length MID RISK - unless guaranteed by your lender. MID RISK also because many sellers won’t want to start the whole escrow process over again and would rather deal with an extension of the loan approval contingency instead (however, NOT guaranteed especially if they have other back-up offers ready to go).
Offer some verbiage to accept the facts pre-disclosed by the listing agent, ie: Unpermitted guest house or a previous litigation issue. Assume all responsibility for doing your own due diligence. LOW to mid RISK if you have a chance to research to your satisfaction the issues raised.
Offer an "escalation clause" up to a certain amount. Risk: Reveals to the seller the highest amount you would be willing to pay for the house which might be higher than any of the other highest offers but risks paying more than necessary. Advantage: Prevents from being outbid by another offer knowing you would have matched or surpassed that offer, given the opportunity to do so. Gives you a much better chance (not a guarantee) at getting the house and still be within your price limit.
Offer to pay for some of the costs normally paid by the seller (but not obligatory for the seller). Examples based on a purchase price of $1.450M NHD report approx $100 Escrow fees = $3,440 ($250 base + $2.25 per $1,000 of the purchase price - APPROX FIGURE NOT VERIFIED NOR GUARANTEED) Buyer's Title Insurance based on $1,450M ($3,000 - APPROX FIGURE NOT VERIFIED NOR GUARANTEED) There are other as well (just ask).
Offer a FREE LEASE-BACK (for a week or more...) to the homeowner. Some homeowners overestimate how much time they will need to move and sometimes feel rushed. If you can give the seller more time after the close of escrow, this can be the cherry on top of your offer. RISK LOW - As long as you accept that you will be paying a mortgage plus whatever other costs are incurred (water, heat, etc…) during the lease-back time.
With high buyer demand and multiple offer scenarios, incorporating one or two these strategies can help make your offer rise to the top!
Got Questions? Don’t hesitate to reach out!