Writing a Home-Offer Letter- Is It a Good Idea?

By
Real Estate Agent with Keller Williams Realty Leading Edge
https://activerain.com/droplet/4tsq

Writing a Home-Offer Letter – Is It a Good Idea?

The most important letter you'll submit to a home seller is the one you'll get from your lender stating that you are preapproved for a mortgage. Savvy listing agents will counsel their clients to refuse offers from unapproved buyers, so all the flowery prose of a home-offer letter will mean nothing without loan preapproval.

Assuming you have your lender's letter, whether or not you also submit a home-offer letter depends a great deal on the type of market in which you're buying and the competition.

The Market

When the real estate market has lots of buyers looking for homes and few houses for sale, it's a seller's market. With the seller in the driver's seat, purchase offers tend to get cleaner, with fewer demands from buyers. Offering prices typically come in at or even over the asking price. When supply is low and demand is high, it's challenging for buyers.

Several regions of the country are currently in seller's markets. In some of the more in-demand areas of California, for instance, there are so few homes for sale and so many buyers in the market that almost 6 in 10 homes are selling in multiple offer situations, according to the California Association of Realtors®. In the second quarter of last year, home sellers received an average of 4.2 offers.

The Competition

If you're unfortunate enough to have fallen in love with the same home that three other people are smitten with, be prepared to do battle. The chances are good that they, too, are preapproved for a mortgage, which puts you on equal footing. If any of them is waving cash, however, all bets are off, as the table is tilted in the cash-buyer's favor.

There are several reasons for this, the most significant of which is that the seller doesn't have to worry about a loan falling through if the house becomes overpriced in a bidding war. There is no appraisal with a cash offer. There is no lag time, waiting for final loan approval. Cash buyers are streamlined buyers, and they usually prevail in a bidding war.

Home-offer letters, however, have been known to sway some homeowners in this situation – especially those with an emotional attachment to the home. Here in the East Providence, RI real estate market I have had several of my past clients write a nice letter to the sellers to help tug at the heart strings, and it's work in every case.

The "Pick Me" Letter

The home-offer letter was created years ago to help sellers stand out from the competition. The problem now is that so many buyers use them, they may be losing their effectiveness.

Since there is no harm in trying, however, let's take a look at some tips for the ideal home-offer letter:

Don't be robotic. This isn't a form letter, it's a letter that you hope will tip the scales in your favor, so put as much personality into it as possible. Start by using the seller's name in the salutation. "Dear John and Mary" is far better than "Dear Seller."

Make it emotional. Tell the seller how the home resonates with you. Even if it's just the color of the walls, tell the seller how much you appreciate her taste and how close it matches yours. Be sincere in telling the seller why you fell in love with the home and why you want to live in it.

Explain why they should pick you. Point out your strong points as a buyer, such as few contingencies, your willingness to increase the offered price, or your strong credit score that will help your loan approval zip right through.

Keep it brief. Try not to go over three to four paragraphs.

Keep it upbeat and positive. Sellers don't care if theirs is the ninth house you've made an offer on. They don't care that you need a one-story because of health issues. Accentuate the positive and leave the complaints out of it.

There's an old saying that is frequently tossed around in business circles: "People do business with people they know, like and trust." Helping the seller get to know you, like you and trust you is a tall order for a short letter, but it should be your goal nonetheless. I believe writing a home-offer letter IS a good idea.

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Ambassador
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Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

This personal touch has definitely made buyers stand out.  Great suggestion.

Aug 12, 2014 03:46 AM #1
Ambassador
3,116,927
Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

Featured in the group:  BARTENDER, MAKE IT A DOUBLE.

Aug 12, 2014 03:46 AM #2
Rainmaker
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Susan Haughton
Long and Foster REALTORS (703) 470-4545 - Alexandria, VA
Susan & Mindy Team...Honesty. Integrity. Results.

I have had this work as a Buyer's Agent and I have had it NOT work as a Listing Agent.  I have also been "warned" in a Fair Housing class to be sure the buyers did not include photos of themselves in an effort to sway a seller.  I had never thought about it from that perspective before, but it is food for thought.

Aug 12, 2014 10:43 PM #3
Rainmaker
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Wayne and Jean Marie Zuhl
Samsel & Associates - Clark, NJ
The Last Names You'll Ever Need in Real Estate

We often have our homebuyers write a personal letter IF the seller is a family or a couple and if there's a chance that there is a competing offer. It's not much use when buying from an investor....

Aug 13, 2014 01:02 AM #4
Rainer
120,240
Heidi Kelley
Keller Williams Realty Leading Edge - East Providence, RI
Your Rhode Island Real Estate Connection

Chris Ann, Susan, Wayne & Jean Marie- Thanks so much for  your comments. I've been without a computer for a week which is why I didn't respond sooner.

 

Aug 18, 2014 10:58 PM #5
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Debbie Reynolds
Platinum Properties - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

Heidi, In a highly competitive market it could be a very good idea. I will say I have never used this technique as I didn't think the situation called for it.

Aug 19, 2014 11:10 PM #6
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Heidi Kelley

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