Securing a dream home can be a challenging process, especially in a seller’s market. A seller’s market occurs when there are more buyers than there are houses for sale. When this happens, prospective buyers might try to outbid each other in order to secure the property. From the seller’s perspective, choosing the highest bidder might make sense, but this is not always the case. A good offer letter can make a difference. To improve your chances of beating out other buyers, here are some tips on how to write a winning offer letter.
Cash is king
If you can pay in cash, indicate it in the letter. Even if a cash offer is lower than the highest bid, sellers will find cash more attractive, especially if they need to buy another house to move into.
If you can’t pay for the full amount in cash, offer the largest security deposit you can afford. Earnest money that’s substantial will make the seller think that you’re more committed to buying the home. The amount you offer will depend on market variables. As a general rule, however, pay no more than 5% of the asking price. Remember that if something goes wrong with the deal later on, you won’t get your deposit back. So consult with your real estate agent before committing to an amount.
You might only have one chance to make an impact on the seller – it helps to write your best offer.
Include a mortgage pre-approval
If paying in cash isn’t an option, obtain a pre-approval letter from the lender or bank. A lender’s letter signifies that a buyer’s financial records have been verified and that the buyer will be able to obtain a loan to purchase the home.
If, for some reason, you are unable to obtain a pre-approval, you can opt for a pre-qualification letter. Unlike a pre-approval, a pre-qualification means that based on the buyer’s own estimates of their financial situation, a lender considers the buyer a likely candidate for a loan.
Write a personal letter
Selling a home can be an emotional process for the homeowner. Assure the seller that their home will be as cherished when it changes hands. Mention the features and details of the home that you love. If the property reminds you of your childhood home, write that down. If the property is the home you’ve always envisioned, indicate that as well. Make that personal connection with the seller.
When making an offer, don’t make demands that will rub the seller the wrong way. Don’t ask the seller to bear costs that buyers normally take on. Be generous when it comes to certain terms. If other buyers demand possession by the end of the day of closing, give the seller enough time to move out.
Offer to close quickly
Sellers often prefer to close within 30 days. If you can bring that down to three weeks, it might give you an edge. Find out if the seller prefers a quick close to higher offers by having your agent talk to the seller’s agent.
Make it short and sweet
Letters that are short, simple, and to the point stand out. Make sure your letter sounds professional but not cold. Include your reasons for wanting to buy the property. Like any other letter, make sure it has an introduction, a body, and a closing paragraph. Attach documents, such as a pre-approval letter if you have one. Mention pertinent details such as paying in cash, agreeing to waive certain contingencies, and so on. Run the draft by your agent. It helps to think of your letter as your only shot at securing the property.
Get an experienced agent
As you can see, an agent plays an important role in helping you make the best possible decisions at every stage of the buying process. So, go for an agent who knows your desired community like the back of their hand. Look at their track record and find out what previous clients have to say about working with the agent. Interview candidates. Aside from professional qualifications, you want an agent whose way of doing things fits your personality.
The Telchin Group, LLC is the #1 broker serving top-tier clients in prestigious Florida communities. If you want more tips and information on investment properties, check out their blog here. If you’re looking for an investment property in Palm Beach, call 561.301.0249 or send an email here.