There is a lot of advice on how to win a multiple bid scenario (escalation clause, humanize the buyer with a letter to the seller, snipe the competing buyers, etc…).
In this blog post, I am only going to talk about one strategy that you can use effectively without overpaying and even if you don’t have unlimited funds.
1.) I currently have a sale pending on a listing where the seller accepted an offer lower than I would have guessed.
Buyer offered cash, close in 14 days, no inspection contingency, and put 75% of the sales price down as the earnest money escrow deposit. That convinced the seller this was as close to a done deal as you can get before actually closing, so after a little negotiation, they signed a contract.
A clean offer with strong deposit is an obvious winning strategy.
2.) Years ago I showed a home that was priced to sell quickly, to a buyer who was philosophically opposed to paying more than list price, even though he admitted it was worth more than asking price. His wife warned him that if he lost this home because of his foolish pride, he was going to regret it.
The other offer was above list price. Our full-price offer included a $50,000 earnest money escrow deposit which was almost 50% of the sales price. Money talks and the seller accepted our lower offer with the big earnest check attached.
What if you are not a cash buyer with the ability to lay down the big money smack?
Do what you can to make your offer stand out.
3.) I just closed on a home that had competing offers that were almost identical. Both had financing contingencies, low down payment loans, and were full price.
What made one stand out? Offer A had a $500 escrow deposit, offer B had a $3,000 deposit.
Sure, that is only a $2,500 difference, but if you multiply those numbers by ten, it is like comparing $5,000 to $30,000. A significant difference!
Even the $2,500 difference caused the seller to decide, “Buyer B seems more committed, let’s go with that one.”
In the old days, 10% of the sales price was common for the deposit. We went through a period during the easy money boom years where a token $1,000 deposit was common. That might be a serious commitment from a buyer who is going for a ‘no money down’ loan, or 3-5% down payment financing.
However, if you are a cash buyer or getting a conventional 20% down loan, and you offer a token deposit with your offer, you should not expect to be taken seriously.
I send a bi-weekly, digital newsletter with insights into the real estate market, as well as helpful hints, tips and trends for homeowners. If you would like to receive it, just send me a message with your email and I will add you to the next mailing.
All the Best!
Jim Sweat, ABR, CLHMS, CRS, CDPE, GRI, e-PRO, ILHM
Author of REAL ESTATE CSI: CONTROVERSY, SECRETS, INSIGHT (coming soon)
Jim Sweat – Helping Buyers & Sellers Choose Wisely Since 1995 ™”
Re/Max Alliance Group
http://myfloridahomesmls.com/JimSweat (Home Search)
A Proven Professional Working for You!
22 Years Experience