Real Estate Blog - A Strong Offer Increases Your Chances of Success

Home : Blogs : Colleen McConnell, Tallahassee Realtor : Colleen's Blog

A Strong Offer Increases Your Chances of Success

A strong offer is one that sellers will consider seriously; it shows that you mean business and provides benefits for both parties. You want to get the best possible deal on a property you've selected, so make a strong offer which is either likely to be accepted or will motivate the seller to open negotiations.

An offer can be simply divided into price and terms (closing date, condition of property, etc. ) - pick one or the other to maximize. Trying to make both price and terms advantageous to yourself will likely offend the seller and make them less likely to negotiate*.

A strong offer has the following characteristics:

- Shows the buyer is serious about buying the property. The size of the binder is a good indication of seriousness and shows you have some skin in the game. A typical binder is 1% of purchase price: less is a weaker offer, more is a stronger offer. A seller takes a risk when they take their home off the market and a higher binder mitigates that risk.

- Shows the buyer is capable of buying the property. A pre-approval letter or proof of funds for a cash offer is essential. Without it, offers may be rejected outright.

- Has a balance between asking for and giving concessions. A strong offer may propose a lower purchase price and balance it with concessions on terms such as a quick closing date (10 days) and accepting the property "as is" without any warranty or repairs.

Conversely, if the buyer needs help with closing costs and wants the property to be in perfect condition when they move in, they can still make a strong offer by giving the seller full asking price with closing costs added on top - assuming that the house is priced at or below market value.

Common sense and an attitude of compromise should rule the day regardless of whether it's a buyer's or seller's market and ideally, there will be an incentive for both sides in every offer and counter offer.

* Expert negotiators such as Herb Cohen http://www.herbcohenonline.com/index.htm advise against negotiating for yourself because it's extremely difficult to remain objective, even if you have excellent negotiating skills and experience.

Posted by Colleen McConnell, Tallahassee Realtor on 02/02/2009 07:26 AM

Comments (52)

Buying a House in the Home Buying Channel

tallahassee realtor, buying a house, making an offer

Post is included in group: Advice for Buyers
Post is included in group: The Lounge at Active Rain
Post is included in group: Realtors®
Post is included in group: Florida Realtor® Network
Post is included in group: Florida Rain Makers

52 Comments on A Strong Offer Increases Your Chances of Success

FEB

Colleen, absolutely correct. The size of the deposit. An approval letter (not prequalification) or cash offer all help the chances for a better outcome.

Strong offers are always good. They save time for everyone involved.

Strong offers are great in this market. Cash is king again.

Tooo many folks buy into the "buyers market" they will take whatever I write thing...and that thing turns into an offer that doesn't get accepted....and THAT is a very good thing !

HA! Strong offers are a thing of the past in my market, MD and Northern Virginia. With some exceptions, Alex., Arl., VA, prices are still falling and buyers know it.

Low price offers in this area are the norm. The way to show buyer strength is through well qualified financials, good loan approvals and good terms and conditions.

I think your advice is very good, and always timely. If the price is low, be strong in other areas such as timing and qualifications... if qualifications are marginal, be strong in pricing and terms... Even in today's market, you gotta have something to offer sellers in your buyer's offer.

Timely post. One thing that is a turn off to all agents is a low ball offer. Its work to preform for no reason, no accepted offer, likely to loose the seller or buyer as they often will blame the agent for not succeeding with the impossible.

Colleen - I like the way your present these. I try to give my clients similar advice, to encourage negotiation rather than discourage it.

I also like a quick close is part of that formula. If a seller can see light at the end of the tunnel they may more forward.

Colleen, very good points. Negotiations only work when there is a Win-Win situation.

Excellent post Colleen!

In this market where lowball offers are common place, I explain to my buyer that they do not want to be considered a "low baller."

Of course, everyone wants a "deal" but that doesn't mean much you don't get that house we've been searching for, for the past 3 months!

Investment properties don't come with emotional commitments.

If you find the property you want to live in, raise your family in, and plant some roots in, please, please give serious consideration to your first offer being a strong offer!

Colleen -

You know, this is so true!

How many times, on your own listings, have other agents submitted unfounded low ball offers on behalf of their clients. Many simply take the asking price, deduct 10 or 15 percent, plus another $5M just for good measure. I have seen these, and so have you!

As a Listing Agent, when you ask the Buyer's Agent their logic behind the offer - they admit they don't have one, they are simply doing exactly what their client wanted to do.

We have a fiduciary duty, when acting as Buyer's Agents, to advise our clients that submitting a without-basis offer will likely reduce the likelihood of getting their offer accepted, and increase the chances of a too-high counter offer.

Sadly, most Buyer's Agents do not have the moxy to stand up in this way. Others feel their job is to insult the listing agent or his client, and bludgeon them into accepting their ridiculous offer. Both strategies never work!

Great share!

DEAN & DEAN'S TEAM CHICAGO

Morning Colleen, Balance really is the key, isn't it ? A great offer is seen by both sides as a win-win.

Colleen, great points! I really liked this post!

Great post Colleen. Making your buyers put in good solid offers can be like dealing witha child. But if you have all of your research done and can make a good presentation of a realistic sale price you will have some leverage!

Very refreshing to see a post like this in a "low-ball" market. Thanks for the inspiration!

The terms of the offer are always the most important part.

I work in a market that is primarily made up of cooperative apartment sales. I try and encourage offers from buyers even if they may not seem good offers. At least it tells the seller that there is interest in their property but not at the price they want to sell for.

We have seen a serious drop in inventory. If someone doesn't have to sell, they aren't putting the property on the market and I don't have active comps to work with. The offers, or lack of, are the only feedback I can give to a seller. A low offer with great terms can be better than no offer at all. It doesn't guarantee a deal but does establish grounds for communication.

Happy Monday,

Catherine

Balance, common sense, fairness, good faith, willingness to compromise, and realistic goals. On both sides of the transaction, these qualities make for a positive experience for both buyer and seller. Great blog, Colleen!

Thank you for the poat and how to help buyers be in the post powerful position they can in writing an offer with whatever their situation is with a nobody loses mentality. Thank you Colleen.

A creative offer could also do the trick. Anything for a win-win situation!

Strong offers are a must. Preapproval and strong deposits are great. I like to include some things my buyer would not mind if it is negotiated out. Price needs to reflect current market conditions. Everything else is negotiable.

All your points are very true but in today's market people forget that most properties have already been discounted and still think they can bottom fish.

I WISH all buyers could read this...however, with the buyer's market we are having here they still think that the seller should bend over, and well...you know. Great post, and congrats on the feature!

You are so right. Getting emotions off on the wrong foot with the seller has zero advantage. In markets like this we can talk all we want but the low balls will still come in. We have prepared our sellers to expect offers 10-15% below asking price. That has helped in taking the edge off of the seller's emotions.

Great post!! Now if I can just get my Buyers to understand it!!

Excellent post Colleen! Making a strong offer is so important, but in today's market so many buyers have this idea that they should offer a ridiculously low number. I also agree that a pre-approval letter is a good idea; I don't submit an offer without one!

Have a great day,

Anne Rains

Excellent suggestions.

Aloha,

Keahi

Super job Colleen. Failing to make a compelling offer is typically the biggest mistake I see from buyers (and agents) who do not know how to get the best deal!

Colleen, Great post, a strong offer speaks volumes to sellers. I ALWAYS have to point out that a low ball offer could offend and most of the time back fires, sometimes they listen, sometimes not.

I think writing an offer is good in todays market. I think an offer means the buyer like the home(even if its low). Most homes today are overpriced. I do show them what have sold in the area.

Colleen -- nice post, and great points. Really important to have a strong offer -- however that gets defined, something where all feel they can 'win' -- giving and getting -- called negotiating. There is still a place for it! thanks.

well said. The offer has to show that the buyer at least understands the values in the area before bidding, and also that they are willing to give the seller something they need in exchange for a more favorable contract for the buyer. Common sense negotiating. As the market has tipped to a buyers market, the concessions are obviously heavier for the seller, but still there needs to be some willingness by the buyer to be realistic, or they will make tons of offers and never own a house.

Good post today, thank you for getting it out to us. I agree with the points you brought out. The buyers lately are set up to believe they can ask for everything for nothing. It's the attitude out there because of all the negativity in the media. I hope I live long enough to see this market turn around.

Portsmouth NH Real Estate

Some good points. Lately it seems buyers want it all I try to advise they make it balanced and it beating the seller up on the price take the home as is like you suggested...Kelly

The thing I've noticed is this. Every listing that is not theirs is over priced by at least 10%. I've gotten offers on my listings from agents who have a home in the same subdivision on a comparable house and the offer is 15% less tha their listing. So are they saying that thier listing is that far off too. Probably not!

Colleen,

Those are nice points to say the least...

see my post for the other side of this... it certainly supports your points

http://kelevra23.wordpress.com/2009/01/19/how-not-to-make-an-offer/

Sean

Great article, Colleen. I'm reblogging!

FEB

great points although I rarely see 1% as earnest money anymore...

Great Post!

A stronge offer is always the best offer. Too often I see buyers who think they own the market so they throw in a ridiculously low offer just to see how much the sellers are willing to move. It wastes time energy and is just plain annoying!

Great post...I especially appreciate your pointing out that there is more to a strong offer than just price. The other terms can be equally or more important. In our market I also have buyers sign all the disclosures as it sends the message to the seller that the offer price takes into consideration any issues the property may have. In the event I have a listing with an offer that does not include available disclosures getting those will be part of any counter if necessary.

I think I've been able to shorten the negotiating process by providing choices initially, usually three. Since my Clients and I put the choices together, they would be happy with whichever one the Sellers choose, and the Sellers feel more empowered when they are offered choices.

Colleen,

Pre-approval letter is definitely part of a strong offer. Pre-approval generally means that the buyer's credit has been checked and the funds to close are available.

FEB

Thanks for everyone's comments. I like the idea that the disclosures send a message to the seller that the buyer is aware of the property's problems - that can surely remove one worry on the seller's part.

Love the idea about giving the seller choices, makes both buyers and sellers happy.

FEB

I wish some of the buyers understood that just because it is a buyer's market, it does not mean that sellers are desperate!

Great advice Colleen! With so many offers on short sale properties or foreclosures, the buyers initially seem to think that they can get by with a very tiny escrow deposit and low ball offer. Those are usually the offers that the bank never responds to. Regardless of who the sellers are, a strong offer is the way to go!

FEB

ANother great line - that I got from Active Rain - is to remind buyers that if they think it is a great deal, then someone else will too - You can't low ball a great deal and then expect that no one else will make a better offer - When you find that great deal, go for it strongly and don't muck it up.

These are some great points. I'm going to print your blog and hand it out to any buyers who might want to make a low ball offer, which is the only kind I've had lately.

MAR

Colleen, this is so true and I wish I could get through to some buyers abut this. I hope it's okay to share this with them Thanks again

APR

Colleen, this is a great common sense approach. However, in our market common sense seems to have flown the coop! Buyers come in with outrageously low offers and ask for closing costs on top of it. Some day we'll be back to a normal market - maybe in the next decade?

JUL

Colleen,

How many low ball offers result in a transaction? I remember one...it was our first as a buyers' representative. Many times we are working with a buyer who just wants to "play the game", making offers that they know will not be accepted.

Nice job with the subject matter.

Many Blessings,

Jim & Joan

This blog does not allow anonymous comments