Welcome back. Mitch Argon here with CalNeva Realty. I’m going to share with you some tips on writing winning offers in today’s market and in general writing clean offers, so you can get your offers accepted more often than not. Stay tuned.
Okay. Let’s go through a few tips. I’ve been spending a lot of time talking with agents on my team about writing offers, better offers, clean offers. I’ve been training a lot of newer agents on contracts and best practices and getting a lot of questions about this stuff, so I thought I’d share it with you. We are in crazy times right now, as you probably know. So I broke this out into writing winning offers and clean offers in today’s insane market and in any market. There is no silver bullet in today’s market. It’s very competitive, as you probably know, so let’s just talk about some of the key things you should factor in and really advise your clients on.
Best and highest price, goes without saying. Many homes are selling at over the list price. So you’re going to want to have your client put their best and highest offer forward on the price in order to compete, because they likely will be competing. Just a tip, if you’re not in a competitive situation, I would encourage you to have a little bit of discipline and not go offering a crazy number over the asking price. If it’s not competitive, the seller may be fine taking the list price, and if there’s nobody else around, you may be able to save your clients some money in the path of doing that.
If you’re going to go above the list price, you’re going to want to address an appraisal contingency or an appraisal contingency shortfall. Very, very important. No seller wants to have a high offer price and then have to be pulled back down based on an appraisal. I recently was speaking with an appraiser in Reno, and he told me that 80% of all of the appraisals he’s doing are coming in below the purchase price. So you’re going to want to address this in the contract to make your offer more competitive. You can do this by waving the appraisal contingency in its entirety, or by doing it for a certain amount, maybe up to $20,000, $30,000, 15, whatever your client is comfortable with and has the ability to make up, if the appraisal does come in short.
We have a standardized set of language that we use with our group to help them to put that language together in a very consistent and high quality way. Encourage a buyer to qualify for a conventional loan if they’re getting a loan, or if they’re paying cash they’re in a great position. It is very difficult to have a buyer win in a competitive situation if they’re using a VA or an FHA or a Nevada Grant Loan product. So if they have the ability to go to a conventional, it’s going to dramatically improve their competitive position. I strongly encourage you to have that conversation with your buyer.
Next one down here is closing costs or seller costs. In general, the more things you load onto that seller in terms of costs like repair allowances, paying for a home warranty, any closing cost splits that are not normal or typical that we usually do in our marketplace, you’re really detracting from the purchase price on your offer. So I’d encourage you to make those things clean. Of course, advise the client so that they understand that a zero repair allowance does not nullify their opportunity to have an inspection and cancel if the inspection is not satisfactory. But it’s going to make a big difference in just making your offer cleaner and more attractive to the seller.
Last thing here, any seller sweeteners. I’m using here rent back flexibility or cost as one of them. A lot of sellers are apprehensive about selling in today’s market because they know they’re going to be buying in today’s market. So if you can give that seller some cushion in terms of a rent back, whether it’s at market rates, reduced market rates, or free, that is going to be a sweetener for the seller. And that could be a difference maker if you’re able to offer them that flexibility, over an offer that’s more rigid in terms of the move in and move out date.
Okay. In any market, these are tips for today’s market. There are probably other things you could do. I’m just putting a couple of key things to think about. But in any market, here’s some things that I see when I’m listing properties and I get offers coming in that I don’t like, and sometimes the clients don’t like it, but don’t email extra documents. If you’re going to send over an offer, the listing agent doesn’t need to see your duties owed and your COVID-19 advisory and your get a home inspection and your common interest community and all those different things. Just send over what the seller will need to review and respond to or sign if they’re going to accept the offer or prepare a counter. So the purchase contract and any addenda that you might have that require a seller signature. Don’t send anything more than that in terms of extra documents.
Next thing, put all your documents into one PDF, make it really easy for the listing agent to process that information. I sometimes get offers, and I get a bunch of different PDF documents, and it’s kind of a pain. I’ve got to go through and organize them or split them apart, if they’re sending me extra documents in one PDF. And it just makes more work for the listing agent. You do want to make this easy for the listing agent, because you’re representing yourself and your client as being a strong buyer and you as being good to work with. So you should put all your documents into one PDF and make it easy for the listing agent.
Something else I see in many cases is blanks or missed check boxes in the offer. If you miss a check box on who’s paying for a septic pumping or who’s paying for the transfer tax or whatever it might be, what you’re really doing is you’re going to make the listing agent do some extra work for you to clean that up. They’re going to have to come back and counter that or do an addendum to make sure that we know who’s paying for all these different things, and we have absolute clarity. Having those things blank, if you’re in a competitive situation, is not good. The listing agent’s probably looking for someone who’s going to be easier to work with and maybe on their game. And those blanks don’t speak well for how that offer would be presented.
Last thing on here in any market, really, we always want to be sensitive to the expiration time and date on the offer, so I would encourage you to always reach out and talk with the listing agent. Phone call’s great. Text or email is also fine, but find out from them, when will the seller need to, how much time will the seller need, pardon me, to be able to receive the offer, review it, and respond? So you don’t want to give somebody too much time, but you don’t want to give somebody too little time either. And so knowing that dynamic, knowing how rapidly the seller can respond or how slowly the seller can respond, will help you to put an expiration date that is reasonable, but not too much time.
Okay. So here’s some tips. I hope this is something you can put into practice when you’re writing offers, putting your client’s best foot forward, and making yourself look as best as you can. There are other things you can be doing, of course. This is just a quick sample to give you some things to think about. Hope that’s useful. Until next time, we’ll see you.