2 Tunnel Road Berkeley , CA 94705

Making an Offer on the House

In a perfect world

on the relationship you will have with your agent and the role they will play for you, ask them to clarify their position and which considerations they will take into account during the buying or selling process.

Your offer price will be based on facts, so that even if it’s significantly lower than the asking price, the seller should be rational and recognize its validity. However, the seller’s response is beyond your control.

In most areas, you will not be presenting your offer directly to the seller in person. Your goal when your agent presents your offer is to give the seller few reasons to say “No” and many to say “Yes.”

One effective technique, called “loading,” involves sending a separate statement with your offer that concisely recaps information gleaned from your comparative market analysis (CMA). This is especially important if your offer is below asking price; accepting a lower offer can be emotionally unpleasant for some sellers, and your letter should help ease them through that process.

Sample Letter to Seller

Dear Mr. and Mrs. Barnes,

Your property is listed for $189,000. To arrive at our offer of $178,500 we performed the following analysis.

The five homes below are comparable properties that have sold within the past six months. Since no two homes are identical, we have noted the unique amenities each offers.

[Addresses of five comps, each with the sale price and two or three amenities, such as a renovated kitchen, walk-in closets, a pool, a cabana, professional landscaping, new paint, new carpet or a three-car garage. Sale prices of most of the comps cluster around the buyers’ lower offer price; the one or two properties whose sale price is at or near the sellers’ higher asking price each has several of the more expensive amenities.]

The following five homes are also comparable to yours and are currently for sale in your area. Again, we have noted the amenities of each home:

[Addresses of five active listings and their asking prices, again with two or three amenities that the sellers’ home does not have. Similar clustering of prices around the buyers’ offer price.]

Among all these choices, we have decided that we wish very much to make your property our new home, and we are willing to pay a fair price for it. We are also committed to seeing that the closing process goes smoothly and quickly. To that end:

  • We have a pre-approval certificate from our mortgage lender.
  • We have no contingencies involving the sale of another property.
  • We have not asked you to make any major changes or improvements.
  • We are willing to coordinate closing on this sale with the closing schedule of the new property you are purchasing.

Thank you for your consideration, and we are hopeful you will accept our offer.

Bill and Barbara Wilson

Why should you need such a letter? To make sure the seller has all the facts. When your agent presents your offer to the seller’s agent, he or she may or may not review the CMA with the seller’s agent to bolster the case that your offer is a fair price. The seller’s agent in turn may or may not present that analysis to the seller. In short, there’s a high likelihood the seller never hears the supporting case for your offer.

However, both agents are required to convey all written documents to the seller, so putting it in writing and attaching it to the written offer ensures the information gets through.

If your offer is substantially below the asking price, a larger earnest money deposit may tip the scales in your favor. Or you could add a provision to increase the deposit to 5 percent of the purchase price upon removal of the mortgage financing or home inspection contingencies.

The other critical piece of presenting your offer is to give the seller a limited amount of time to respond. There is very little reason sellers shouldn’t be able to make a decision within 24 hours, even if, for example, one spouse is out of town. The more time the seller has to respond to your offer, the more opportunity for other offers to be presented.

And don’t underestimate the power of a message that appeals to the seller’s emotional attachment to the house. Sometimes sellers will take a lower price just to be sure the house is going to someone who will treat it well.

To waive or not to waive?

Because each contingency in your purchase offer represents a chance for the deal to fall apart, sellers may be leery of offers with a number of contingencies. This is especially true in markets where several buyers are competing for the same house.

Buyers who have lost a couple of bids may be tempted to waive all contingencies. If you find yourself considering this step, think long and hard. Most real estate professionals counsel strongly against it.

One solution is to retain the necessary contingencies but shorten the compliance time. Rather than 15 days to respond to the seller’s disclosure form, for example, you might specify giving your response in four days. Or you might specify having the home inspection performed within a week instead of 10 to 14 days.

By reducing the amount of time needed to work through all the contingencies, you are demonstrating your commitment to the purchase. This strategy also acknowledges the seller’s desire not to have the property tied up overly long by a contract that might fall through.

Be realistic!

In a perfect world, your offer price will be based on facts, so that even if it’s significantly lower than the asking price, the seller should be rational and recognize its validity. However, the seller’s response is beyond your control.

If the seller rejects your offer without making a counteroffer, all you can do is move on.

At the same time, if you hear from your agent or the seller’s agent that the seller has accepted or has countered with a purchase price you’re willing accept, keep your elation in check. Don’t do anything drastic like give notice to your landlord. Sellers have been known to tell their agent one thing on the phone and change their minds later. Remember: Nothing is enforceable until you see it in writing, and you respond in writing.

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