Mistakes to avoid when making an offer
Not every offer to purchase a home is created equal. Astute home buyers should know that crafting the right offer is critical for success in the most competitive of California housing markets.
Making an appealing offer in a seller’s market requires some strategy. However, home buyers can help themselves in the process by averting some common and easily avoidable mistakes.
The Time Factor. When you find a property you want, don’t delay, unless you are strategically waiting out a situation. By not putting an offer in the seller’s hands, that only leaves the window open for other offers – and often times better offers – to be made. Avoiding competition from other buyers gives you the most leverage possible.
Be Fully Prepared. For a variety of reasons, it can be advantageous to be the first offer through the door. So what happens when you find a home you like but can’t get an offer in? Either you lose out on the property altogether or it costs more than you wanted due to competition. Having an established relationship with a lender, an accessible down payment, access to a pre-approval letter and documents supporting your proof of funds gives you a leg up.
Show Financial Strength. Do get pre-approved to show sellers you have the financial ability to purchase the home. But when you use that amount as the exact offer price, it may communicate to sellers you don’t have any room to negotiate or will be in trouble if mortgage rates rise. When competing against other offers, especially all-cash offers, don’t be afraid to show your true financial strength to prove to sellers your ability to get a deal done.
Waiving Inspection Contingencies. Doing this only gives you a tangible advantage in quick-close circumstances. Unless there is something to hide, many sellers understand the right of buyers to at least find out what they’re buying, even if it’s an “as-is” property. Plus, in waiving the inspection contingency you run the risk of losing your earnest deposit if you back out of the deal later.
Avoid the Lowball Offer. Many homebuyers want to make a lowball offer just to see what happens. Because, you never know, right? These offers are counter-productive in a seller’s market. You run the risk of insulting the seller and losing out on the deal completely when you should have just put your best foot forward.
Artfully Present Your Offer. Here it is straight: Most sellers don’t want to work with people they don’t like, regardless of how much money they have. I’ve had offers accepted in uber-competitive Los Angeles neighborhoods based solely on sellers or their agents liking me and/or my clients and wanting to work with us. However you chose to do it, position yourself as positive, professional and easy to work with in the eyes of sellers.