A Winning Offer: 5 Steps To Home Buying Success

In this volatile market, what will it take to submit a winning offer?

Our nation is in the midst of a serious housing crunch. Last year, a lack of inventory and soaring prices left many would-be homebuyers unable to fulfill their dreams of home ownership. But now, with interest rates climbing, many are also feeling desperate to lock in a mortgage rate. Of course, this has only added fuel to the fire.1

Fortunately, if you are a buyer struggling to find a home, we have some good news. Of course, it’s true that higher mortgage rates can decrease your purchasing power. But there are alternative ways to compete in a hot market.

Yes, a high offer garners attention. However, most sellers also consider a variety of other factors when selecting a winning bid. Here are a few tactics you can utilize to sweeten your proposal and outshine your competition.

We can help you weigh the risks and benefits of each. Then we can craft a compelling offer designed to catch your sellers interest.

Even in this crazy market, with a bit of guidance from a pro, buyers can utilize sound strategy and submit a winning offer they can afford to live with.

(1) Financial Strength, The Key To A Winning Offer

The reality is that no one gets paid if a home sale falls through. That’s why sellers and their listing agents favor offers with a high probability of closing.

Sellers particularly love all-cash offers because they provide more certainty that financing issues will not delay or prevent a closing. But don’t despair if you can’t pay cash for your home. According to the National Association of Realtors, only about 1 in 4 home buyers pay all-cash. Therefore, the vast majority obtain mortgage financing.2

If sellers know that buyers are pre-approved, they feel more assured that their sale will close. Therefore, a wise buyer will apply for a pre-approval letter before going house hunting. Such a letter will help to convince sellers that you are a serious buyer. The competitive advantage that this offers may be the most important key to making a winning offer!

It’s also important to consider the reputation of your lender. While sellers may not know or care about a lender’s reputation, their agents often do. Some lenders are much easier to work with than others, especially if you are pursuing particular types of mortgages, FHA or VA loans for example .3 To be sure, you’ll want to work with a lender who specializes in the type of mortgage you are applying for. If you are unsure who to choose, we would gladly refer you to one of our reputable lenders. Those we work with are experienced and customer oriented.

(2) A Sizeable Deposit Can Result In A Winning Offer

Buyers can show sellers that they’re serious about their offer and willing to have significant “skin in the game” by offering a larger than usual earnest money deposit.

The seller’s closing agent usually holds these funds in escrow. Then, in preparation for closing, the agent will apply the deposit to the “funds to close” due from the buyer. On the other hand, sometimes an unresolved problem may cause a buyer to exercise a right under the contract and choose not to close. If they do so, their deposit will be returned to them.

The amount of an earnest money deposit is typically 1 to 2 percent of the sale price. However, offering a larger sum can demonstrate to the seller that you are financially strong and therefore give you a competitive edge.4 We can help you to balance your financial capability against your desire to submit a winning offer. Together we can arrive at an optimal amount for your earnest money deposit.

(3) Ask Only For Necessary Contingencies

Most buyers include contingencies in their offers. These clauses protect one or both parties to the contract. Utilizing such clauses, either party may back out of the agreement under certain circumstances. However, contingencies are negotiable. Therefore, they must be agreed upon by both buyer and seller to be legally binding.5

Common Contingencies

Financing: A financing contingency gives the buyer a window of time in which to secure a mortgage. If they are unable to do so, they can withdraw from the purchase and the seller can move on to other buyers.

Inspection: An inspection contingency gives the buyers the opportunity to have the home professionally inspected to determine if there are issues with the roof, wiring, plumbing or other physical elements of the home. Typically, the sellers may choose whether or not to remediate issues that arise. If they choose not to, the buyers may withdraw from the contract.

Appraisal: Most lenders require an appraisal to determine the home’s value before funding the mortgage. An appraisal contingency gives the buyer an opportunity to get the home professionally assessed to ensure that it is valued at or above the sales price. If an appraisal comes in below the contract price, the buyer may reopen negotiations with the seller. They may also decide to close according to the original terms of the contract, or to simply walk away without penalty.

Sale of a prior home: Many buyers cannot afford to purchase a new home until they sell their current one. If a buyer is unable to sell their current home within a specified window of time, this contingency enables them to withdraw from the contract without penalty. In our hot sellers’ market, this is a prime example of a contingency that is likely to cause your offer to be rejected. The answer is not to waive this contingency, but rather to at least get your current home under contract before you begin shopping for another.

Keep In Mind That Not All Contingencies Carry The Same Wait!

Since contingencies reduce the likelihood that a transaction will close. Others are so common that sellers expect them and do not give them a second thought. However, the more contingencies that are included, the weaker an offer becomes. Therefore, in a competitive market such as ours, some buyers volunteer to waive certain contingencies to increase their chances of submitting a winning offer.

However, it’s very important to analyze each contingency carefully and recognize the risks created by waiving it. For example, a buyer who chooses to waive the home inspection contingency may not have recourse should they later discover that a home requires extensive repairs. Additionally, a buyer who waives the appraisal contingency may risk overpaying or watching their mortgage fall through. Of course, if they choose to back out of their home purchase agreement without the protection of a contingency, buyers will likely lose your earnest money deposit.6 We can help you assess these risks and avoid the pitfalls created by waiving important contingencies.

(4) Offer a Flexible Closing Date and/or Leaseback Option

In evaluating an offer, money is not a seller’s sole consideration. Sellers’ circumstances can vary greatly and offering terms responsive to their personal situations can make an otherwise unattractive offer very enticing. For example, if sellers are planning a significant move, they may prefer a longer closing timeline to give them the flexibility to find housing at their desired destination without inordinate stress.

Similarly, a short-term leaseback option may provide the sellers more flexibility. It will allow them to retain occupancy of their home for a specified period of time after closing.7 Such an arrangement enables sellers to use the proceeds of the sale of their current home to close on their next home. A leaseback agreement will also make it possible for them to avoid moving twice if their next home is not yet ready to occupy.

Flexible closing dates and leaseback options can provide a powerful advantage for first-time homebuyers if they have a month-to-month or easily transferable lease. They may be able to offer a more flexible timeline than buyers who are simultaneously closing on the sale of their prior home.

Of course, the value of each of these and other options varies with the sellers’ circumstances. Therefore, we will reach out to the listing agent on your behalf to discuss the seller’s preferred terms. Then we will collaborate with you to write a compelling offer that balances your needs and theirs.

(5) Work With a Skilled Buyer’s Agent

In this ultra-competitive real estate market, one of the greatest advantages you can give yourself is to work with a skilled and trustworthy real estate professional. We will make sure you fully understand the process and help you submit an appealing offer without exposing yourself to excessive risk.

Additionally, we know how to write offers designed to win over both the sellers and listing agents. Of course, listing agents play a huge role in helping sellers evaluate offers and they prefer to work with skilled buyer’s agents such as us, agents who are professional, communicative, and courteous.

Once your offer is accepted, we’ll will be there to guide you through any further negotiations required, coordinate inspections and take care of other details involved in the purchase process. We will be at your side every step of the way right through to closing.

How to Make a Winning Offer? Here Is Food For Thought!

Don’t think that a competitive offer needs to be all cash, contingency free, or significantly above the asking price. Sellers are often as concerned about terms as these factors.

We can help you to craft a competitive offer which balances all of these factors and takes full advantage of all the leverage available to you. Contact us today and let’s schedule a free consultation to discuss how we can help you bring your plans to life.

“I would give a thousand furlongs of sea for an acre of barren ground.” – William Shakespeare

Andrew Kruglanski, MBA, ABD, Broker

Ocala Home Guide Realty




National Association of Realtors 1

National Association of Realtors 2

Forbes 3

Realtor.com 4

Bankrate 5

Home Buying Institute 6

Realtor.com 7

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