Paul Valentino, president of Coldwell Banker Residential Brokerage of Greater Washington, writes an occasional column offering insights into the real estate market.This is the second of two pieces examining how buyers can better stand out among competitors in a multiple-offer situation.
Currently, in the Washington-area real estate market, we’re experiencing an imbalance in which the sellers have the upper hand.
But there are things buyers can do to write an offer that would best appeal to sellers while preserving and protecting their own interests.
Here are some tips to help buyers gain some advantage in a bidding war:
- If the seller will allow it, do a home inspection prior to writing the offer. If the seller won’t allow, the buyer should bring an inspector along to walk through the property. This can put buyers’ minds at ease if they weren’t planning to include a home inspection in their offer.
- Use an escalation clause and be comfortable with the upper limit placed on the offer. The buyers should offer a price and terms with which they are comfortable. Buyers don’t want to offer an amount and then say after it didn’t get accepted, “I knew we should have offered more.” Conversely, if the buyers have the winning offer, they shouldn’t say, “I knew we should have offered less!” Be comfortable with the results either way.
- If the seller won’t allow an escalation clause, add an addendum to the contract which states: The purchasers would like the opportunity to counter the next best offer, be it in price or terms.
- Offer to use the settlement agent of the seller’s choosing. Perhaps they have to settle on a home they’re buying. Allowing settlements to occur at the same location can make the seller’s life easier. Sellers love this, and it costs the buyers no money.
- Offer to clean out the house for the seller. Again, sellers love anything that makes their life more simple.
- The buyers should ask their agent to include a contract synopsis, highlighting the major points of the offer. It may make the seller’s decision easier if they have a written analysis in front of them.
- The buyers can offer to purchase a home warranty which covers the seller immediately for the remainder of the listing term prior to settlement, and then covers the buyer from settlement thereafter.
- Offer to pay the seller’s portion of transfer taxes, if any.
- Allow the seller a free rent back period if they need to remain in the property post settlement.
- Agree to make up the difference between the appraised value and the sales price in cash, as long as the appraised value is at least a certain amount.
- Finally, the buyers can ask their agent to pull some properties which have been on the market for a long period of time. Buyers may find less competition for these properties, and equally as important, sellers more willing to negotiate.