13 Ways to Get Your Buyer’s Offer Accepted In a Seller’s Market
Are you currently working with a buyer and you are not confident you can get your client's offer accepted? I’m sharing 13 ways to get your buyer's offer accepted seller’s market in 2023.
So what is the definition of a seller’s market? When there are only one, two, or three months of inventory (number of homes) on the market.
So what created the seller’s market? Last year mortgage rates were at historic lows. Making it the best time to buy a home. The bad thing is with everyone taking advantage of this opportunity and there were fewer homes for sale.
If it were a buyer's market, properties would sit on the market for more than thirty days and buyers could take their time choosing a home and not competing. However, even now with higher mortgage rates, a balanced market still does not exist. So when is a good time to buy a house? NOW. So even in this market, I am going to show you how to help your clients purchase a home.
As a Realtor, I’ve represented both sides in a sellers’ market.
As a buying agent, I had strategies and systems to get my clients' offers accepted.
Representing the sellers, I learned how sellers think and why they choose one offer over another.
My goal is to help you get the home you want in this market, so I’m sharing these strategies with you.
This post is all about 13 strategies to help you get your offer accepted in a seller’s market.
Discuss these strategies with your buyer. *Check with your broker to make sure these strategies are allowed in your state.
1. Make a strategy to purchase a home.
One Saturday when I was working with a first-time buyer, we looked at over four condos and we were disappointed in all four. So jumped on a real estate app to find new listings. We found a property that had just been listed. We were in the condo literally thirty minutes after the listing agent put it on the market.
The new Atlanta Braves stadium was 10 minutes away, it was priced perfectly. I called the agent while we were still in the condo giving a verbal offer. He accepted but I needed a written offer within 30 minutes. I had to write the offer on the spot. This was easy because my buyer and I had a game plan before she viewed it.
A game plan reduces stress and puts more confidence in your hands as the Realtor to execute the deal and confidence in your buyers to compete in this market.
It’s important for your buyers to know you are on their team. If you can’t trust you as their agent you need it’s going to near to impossible to get them to the closing table.
Therefore, your strategy must be competitive before you look at the first property. As their agent, you should already know the specific area they want to live in, how much they are willing to put down for earnest money if they have a pre-approval letter from a lender, know the closing date, and know their closing cost budget, etc. Do not wait until it’s time to write the offer to have this conversation.
2. Refer to another agent if the property is not in your area and in high demand.
I know the commission is great but you will not be able to work every deal, even though you are licensed for the entire state. It's better to make money referring to an agent that sells in the area than to lose out on getting offers accepted because you are in unknown territory. You would also be giving your clients a disservice.
Choose a referring agent that knows the local real estate market, what homes just sold, just listed, and coming soon. Also, a good realtor will more than likely have a relationship or know the listing agent.
3. Make the first offer the “best” competitive offer.
Don't assume the listing agent will call for the highest and best. A "call for the highest and best" is created when a seller receives multiple offers to purchase their home.
The seller will request the offers that are submitted, to re-submit their best offer. within a certain amount of time.
From the new submissions, the best one will be chosen. This strategy from the seller is effective. They know they have the best of the best, but it’s time-consuming.
It can cause an additional 24-48 hours on the market. Some sellers and listing agents do not want to be bothered with additional waiting additional time. So they will just choose from the first set of offers they receive and select the best one.
The best contract always has 100% of everything they are asking for, which means paying at or above the asking price keep reading the other tips below.
4. Use an escalation clause.
Using an escalation clause creates winners in bidding wars. This is a separate contract submitted with your client’s purchase agreement. An escalation clause states your client is willing to purchase the home above the highest submitted offer at a certain price.
For example, Buyer A submits an offer to purchase a home at $100,000. Buyer B submits an offer at $95,000. Buyer C submits an offer $90,000 with an escalation clause attached stating that Buyer C. would offer $500 over the highest submitting price.
This means that C. will now purchase the house at $100,500.
Which is the better deal the seller will pick? This clause will beat out the other 2 offers even though his offer price was the lowest, the escalation creates the highest bid. However, if you do this, you are literally “putting your money where your mouth is” because you have no idea what the highest offer price is.
If the listing agent chooses your offer because of the clause, make sure you request in writing proof of the highest offer.
If you don't want to use the escalation clause agreement you can use this language and write your terms in special stipulations.
5. Be fully pre-approved.
Home sellers always seek opportunities (offers) where they can get their money the fastest. Therefore, the sooner you get them to the closing table the better. Your buyer should already be fully pre-approved for the home before submitting an offer.
The lender is a part of your buyer’s team. “Fully” pre-approved means turning in every document requested from the lender, and the lender sends it to underwriting. When a seller accepts your offer, they want to know they have a fully qualified buyer to purchase their home. There have been times when I, as the listing agent have been asked by my client to call the lenders that pre-approved the buyer before accepting their offer.
If your buyer is fully pre-approved, the lender just needs the contract and it will be sent directly to underwriting. In some cases, you can close sooner. If you do this strategy ask your lender how long it will take to close because you want to compete with other offers.
If your buyers have a weak lender that pre-approved too early, then you will be having to find a lender to save a deal. According to lender, Kevin Jefferson, “going to a new lender to save a deal sets everyone back and you as the agent are fighting the clock to keep the deal on the table.” Make sure you are workin with a strong lender the first time.
If the lender can give you a competitive time frame request they put the terms in writing along with the pre-approval letter.
6. Submit a backup offer.
Submitting a backup offer never hurts because many buyers terminate during due diligence or they may not qualify for the loan. Being the backup can put you next in line if the deal were to fall through. However, there is a catch, if the seller already has their mind set on the dollar amount they will receive at closing they want the same amount or better with the new buyer and contract.
Even though you are the back-up offer the seller does not have to accept your offer. If you don’t match or do better than the previous contract, the listing agent will put the home on the market- which you don’t want. You will find yourself competing again.
If you want to be a back-up offer the listing agent may give certain terms the sellers will want. After submitting the back-up offer it’s up to your realtor to check periodically on the status of the existing contract. Sometimes, listing agents forget about backup offers. If a deal falls through they automatically put it back on the market.
7. Increase your earnest money.
Giving earnest money is similar to an engagement ring. An engagement ring is a tangible promise that you will marry. Earnest money is a tangible promise to the seller your buyer will purchase their home. Typically earnest money is 1% of the sales price.
For any reason your clients change their mind about purchasing the property, after due diligence, the seller will receive the earnest money. So your goal as their agent is to protect their earnest money at all costs.
However, in a seller’s market, increasing the earnest money by $1,000 to $2,500 can make your client's offer competitive and show you have a serious buyer.
8. Know the seller’s motivation.
Before writing an offer for your buyer you must know the seller’s motivation. Besides wanting top dollar for their home, are they downsizing, are they getting married, moving to another state, or getting divorced?
Besides buying their home, find another way to help the seller in their transition. This is called integrative negotiations. This would help you determine the best way your buyer can help the seller in the situation and they can also help you by accepting your client’s offer.
For example, if they are retiring and down-sizing, offer for them to buy or leave furniture they don’t want.
9. Write a letter to the owners of a home.*
Buying a home in a seller’s market you have to get creative and stand out from the other offers the seller will see. There's nothing like putting an offer in with a face on it. (Do not add an actual photo, words only).
Many sellers are always curious about the prospective buyers wanting to purchase their home. For some, a home sale there is still sentimental value because the property may have been their first home, and created memories by raising a family. A letter from you speaks to their emotions.
Write who you are, why you love the home, and what you plan to do when you purchase ( raise family, move in parents, retire, start a new career, etc.) and thank them for creating a beautiful home.
This letter should be the first thing the seller sees before the offer. Also, for this to work, your offer price must reflect how much you love the home as well.
10. Consider allowing the owners to have temporary occupancy after the closing.
This is a part of #8, “Know Your Seller’s Motivation.” A temporary occupancy agreement means your client and the buyers are allowing the seller to remain in the home “temporarily” after your clients close on the house.
The seller and the buyer would write a contract for occupancy for a certain number of days or weeks. (You as the Realtor have this contract available). According to the terms, once the seller would vacate the property then your buyers will take possession.
This is a good idea if the sellers must sell their home first before buying another home or if they are moving over the weekend.
My seller was purchasing new construction and her lenders required her to sell her townhome first before she could close on her new home. We received over nine offers however, one offer stood out in which my client was allowed to stay after closing.
With this offer, she did not have to move twice and she was able to move to her new home without stress. This was because the new buyer solved a problem by allowing her to stay after closing. The closing was Friday and my seller moved over the weekend. The new buyer took possession Monday at 9 am.
If you use this strategy, trust your instincts, this strategy isn't for everyone. Make sure you are present for the walk-through to protect your client’s interest, before the seller vacates.
Once the sellers are gone it is hard to make them responsible for any marks or damages to the home. It must be in the same condition or better than how you saw it when you wrote the offer (broom-clean condition).
11. Lower your due diligence.
The typical due diligence is from 8 to 10 days. Due diligence is how long the buyer has to change their mind if they want to find another property or not buy a home at all without losing their earnest money.
However, in the mind of a seller that 10 days is the longest to “wait and see” if a buyer is actually going to buy their home or if it goes back on the market. Make the seller feel confident you were going to purchase a home by decreasing your days of due diligence.
If you do this strategy, this means having your inspector ready at a moment's time. Schedule the home inspection 24 hours after you go under contract and they can provide a written inspection report within 24 hours or on the spot. You, as their agent then immediately have to address concerns within 24 hours after the inspection.
If the seller agrees to your request, this is enough room for your due diligence day to be 5 to 6 days. If the schedule fails you can extend the due diligence to protect your client’s earnest money. But there is no guarantee the listing agent and the seller will sign so tread very carefully with this risk of limiting your due diligence days.
12. Do not ask for seller concessions.
In a seller’s market, it’s all about the seller making the most amount to money in the shortest amount of time. When you’re a listing agent, sellers request that offers asking for closing costs be at the very bottom of the pile. They want the best at the top.
They want to make as much money as they can without the buyer getting creative. A creative offer example is the buyers writing an offer increasing the purchase price and then asking for closing contributions from the seller. So the buyer is now financing the purchase of the house and their closing costs.
This way the bottom line (or net) will still be the same for the seller. The seller gets the dollar amount they want and the buyer can still get the house. However, what if the appraisal does not come back at the newly agreed higher purchase price?
When this happens the seller is not happy because they still may have to contribute to closing costs so the buyers can afford the home- which will affect their bottom line.
This is why sometimes sellers ask for these offers to be placed at the bottom. (They are presented to the seller but they are the last ones to be seen.) Therefore, be prepared to possibly pay all of your closing costs.
13. Pay out of pocket.
Anytime you are given the opportunity for the seller to make more on the sale of their home you have a better chance of getting your offer accepted.
However, your client's lender will only finance the fair market value determined by the appraisal.
If your client offers to purchase above the appraised value, the seller may require that your buyers pay out of pocket the difference. If your client considers this strategy, check with the lender to make the deal can still work with your client paying out of pocket and financing. Your lender will advise you on how to navigate this process if it’s necessary.
Congratulations, in advance, on getting your client's offer accepted.
My biggest tip for you: Be calm and patient so your clients will do the same. Everything will work out from the contract, the financing, the inspection to closing. The will be an entire experience you may write about someday.