Hi, this is Jack Ma with Jack Ma Real Estate Group at Century 21 Masters.
The market is crazy! Inventory set a historic low-level last month. We again are seeing 5, 10, 15, or 20 offers. That also means that if you were a buyer writing an offer on a property, you probably have less than 10% chance of getting it accepted.
Don’t get discouraged! If you know the write tricks in writing an offer, you can still get offers accepted in this market without being the highest offer!
Let’s find out how in this Video
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So how do you get your offer accepted in a crazy seller’s market?
First, we have to understand that everyone values things differently and everyone has different risk tolerance. For some people, money is the only thing that is important and they have higher risk tolerance. They like taking chances for more money. Others with lower risk tolerance will value certainty more than anything else even if it means taking less money.
So structuring your offers with both in mind will highly increase the chance of getting your offer accepted.
So what is a certainty to a seller? Certainty to a seller simply means knowing that escrow is going to close properly. After all, no matter how high the purchase price is if the escrow is not going to close, they get zero dollars in their pocket.
Here are a few ways to increase certainty…
1. Having a higher deposit or considering an increased deposit. This goes to give the seller the impression that you are very serious about their property. You have more money on the line meaning the chance of you not buying is lower. To a buyer, this is a low risk high reward proposition because the purchase agreement does have specific terms on liquidate damage in the case of a buyer default.
2. Having a shorter contingency period. Contingency periods are time periods where the buyer can back out on the transaction without losing their deposit. Shorter contingency period gives the seller the certainty that even if the buyers are not working out, they find out sooner than later and the backup offers are probably still interested.
3. Write Up a Non-Contingent offer. This option has the highest risk for a buyer but delivers the most amount of certainty to a seller. When an offer is non-contingent, that means as long as the contract is signed, the buyer cannot back out without losing their deposit… no matter if your loan is approved or not, no matter how the condition of the property is…
4. Consider making a portion of your deposit non-refundable. Now, this is a happy medium for the above three options. Having a portion of the deposit non-refundable shows the seller 3 things. First, you are very confident with your loan getting approved that you are willing to risk your money. Second, you are not going to back out using inspection contingency unless the repair is going to cost you more than your non-refundable portion of your deposit. Thirdly, you give the seller a reason to take a chance on your offer because, in a rare situation where you back up, they will still be up to a couple of thousand dollars. Other than taking longer, this makes your offer almost as good or better than a cash offer.
As you can see, depending on your risk tolerance, there are different options to boost the strength of your offer to give the seller more certainty. I am sure you can appreciate that structuring offers are not just fill in the blank. With a good and smart negotiation, not having the highest price can still get you in on a property that you like.
