How Do You Create A Strong Offer?

By
Real Estate Agent with Jeff Fritzson Real Estate, Ebby Halliday Realtors 0629874

Price Is Not King

No matter where you live, the first thing that comes to everyone's mind when an offer is received is the price. Price is one of the most important items in an offer. There is just no way around that. However, there are many other things that can make your offer stand out and move you up the ladder of preferred offers.

Closing and Funding

In every transaction the name of the game is to close and fund. If you cannot close and fund, the offer means nothing. If it cannot close and fund with the seller's requirements it also means nothing. The more information you can learn about what is important to the seller, the easier it is to craft your strongest offer. Using a good agent can help you obtain more of this information faster and more reliably than most other methods.

Five Points to Tilt The Scales in Your Favor

Items to focus on when creating an offer (in no particular order:)

  1. Price - to find out what the home is worth you should do a CMA. This will give you an idea of what homes are selling for  in the local market. This may not determine your offer but it give you a starting point. The home is worth whatever someone is willing to pay for it. Finding out the price of your offer is determining what you are willing to pay for it. Careful about your emotions.
  2. Finance - no where else can you better see the proof that cash is king than in a real estate transaction. Why is Cash King? There are no contingencies. If you want the house you can buy it without financing contingency or appraisal issues. If there are no cash offers then the higher down payment comes in second as that increases the chances of financing being approved. Who your lender is can also play a factor. For me, big commercial banks, which typically outsource their underwriting and appraising, are less strong than a lender who does everything in house.
  3. Closing date and time - does the closing date match up with when my sellers need to be out of their home. The quicker the close the more likely the close. We all know how things can change rapidly from day to day. The less amount of time to close, the less chance of things going wrong.
  4. Option money versus earnest money - the more option money, the more serious the buyer. Earnest money does not increase the strength of the offer in my opinion. Also the shorter the option time the stronger the offer. This all goes back to figuring out how to minimize the things that may distract the transaction from closing.
  5. Make things easier for the Seller - this is a catch all area. Their are some traditional items that a buyer and seller pay for with regards to closing. Paying for these or simply not asking for these  items make it easier for the seller. For example, in Frisco, quite often the seller pays for the title insurance, the HOA transfer fees, a residential services contract, allowing for a leaseback,  etc... Any of these items removed from the seller side increases their net proceeds. You may go for the higher offer amount or you can focus on reducing the seller's closing costs. Both increase the seller's net proceeds, but may make you stand out.

This list is certainly not even close to being exhaustive or strategic. The next time you decide to buy a home, please keep these things in mind. Think about the offer from the seller's perspective. Take time to review the contract you are about to submit as an offer. Engage with your Realtor®. Make sure your voice is heard and you also listen to what your realtor is telling you.

If you are thinking about making an offer on a home in Frisco or the DFW Metroplex, find out what my other clients know, Your Success is My Focus.

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Topic:
Home Buying
Location:
Texas Collin County Frisco
Groups:
Active Rain Newbies
Realtors®
1st Time Buyers
Frisco Texas Real Estate
Bananatude
Tags:
contract
home buying
negotiating
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Rainmaker
639,697
Bill Reddington
Re/max Southern Realty - Destin, FL
Destin Florida Real Estate

Certainly lots of factors to consider with an offer. Most times price is number one. If lenders get any tighter that will certainly create another financing contingency issue.

May 08, 2014 01:44 AM #1
Ambassador
3,779,867
Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

Jeff- it's a different market and just as a seller has to make their home stand out, so does a buyer, in making their offer stand out. 

May 08, 2014 02:41 AM #2
Rainmaker
2,765,439
Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale-Probate & Trust Specialist

Jeff, You are so right ... the strongest and best offer is not always the highest price offer. There are so many factors to take into consideration.You've done an excellent job in highlighting the top things to consider.

May 08, 2014 02:51 AM #3
Rainmaker
556,488
Maria Gilda Racelis
Home Buyers Realty, LLC-Manchester, Bolton. Vernon,Ellington - Manchester, CT
Home Ownership is w/in Reach. We Make it Happen!

Hi Jeff: I would like to know how option money works in your state or market. In CT, option money is used only for a transaction pertinent to Lease with Option to Purchase.

May 08, 2014 08:39 AM #4
Rainmaker
971,111
Beth and Richard Witt
Long Island Cash Home Buyer - Huntington, NY
Long Island Cash Home Buyer 516-330-6940

Jeff I agree that the strongest offer is not always the highest... Price & terms are equally as important...

Great points...

May 08, 2014 08:46 AM #5
Rainmaker
2,233,227
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Good morning Jeff. I acquire many properties, that are lesser offers, but there are so many more benefits for accepting my offer. You're right, it is not always about price.

May 08, 2014 08:21 PM #6
Rainer
96,912
Jeff Fritzson: Frisco Real Estate Pro
Jeff Fritzson Real Estate, Ebby Halliday Realtors - Frisco, TX
Your Success is My Focus!

Hey Bill - price is always a big part of the offer but someetimes not the deciding factor. Thanks for commenting.

Hi Kathy - what a great way of putting it. Buyers have to amrket their offers almost like sellers do their house. Thank you.

Hey Kathleen - Thank you for your kind words and comments.

Hi Marcia - in Texas, option money refers to the amount of money you provide to keep the house secured for a specific amount of time to allow you to inspect the property and get all your questions answered. DUring this time the buyer can "opt" out of the contract for any reason at all. Nothing to do with a lease option to purchase. Typically the option money is credited at closing but forfeited if the buyer backs out.

Hi Beth - terms can often set you apart from others. Clean contracts make closing easier.

Hi Joe - I bet you know many ways to make terms and "other" options more appealing in your offers.

Thank you all for your comments and taking the time to read the post.

May 09, 2014 12:45 AM #7
Ambassador
1,342,165
Gayle Rich-Boxman Fishhawk Lake Real Estate
John L Scott Market Center - Birkenfeld, OR
"Your Local Expert!" 503-755-2905

Jeff, your synopsis for success in getting an offer from on the table to accepted to closed is very well written!

Good points, and one I particularly like is finding out what closing date works for the seller. Also being flexible makes for a more fluid transaction...being rigid and unbending doesn't help anyone. 

What is option money? I'm not familiar with that.

May 09, 2014 01:51 AM #8
Rainmaker
1,284,671
Jon Kolsky
Kolsky Realty & Management - Long Beach, CA
Licensed California Real Estate Broker

Jeff~ you pen perfectly, I love the way your writing flows But not only is your writing amazing, but your content is ALWAYS on the $$$... "You are sooo right; there are many things that can make an offer stick, and you nail them perfectly....*suggested*

May 09, 2014 01:52 AM #9
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Debbie Reynolds
Platinum Properties - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

Great post providing strategy for buyers, Jeff. I will bookmark this one.

May 09, 2014 12:32 PM #10
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Rainer
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Jeff Fritzson: Frisco Real Estate Pro

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