Far better is a pre-approval letter from a financial institution specifying that the buyer is pre-approved for a loan at or exceeding the amount in the offer. Pre-approved loans are typically contingent on the house appraising at or above the purchase price.
A strong financial case swayed Kathi Smith and Rich Schmidt in selecting a buyer for their two-bedroom, one-bath home in L.A.'s Picfair Village. After putting the traditional-style home on the market in September for $499,000, they promptly received two offers above the asking price. The couple opted for the lower offer because the buyers looked financially solid.
"The reason we accepted the lower offer was that it seemed more likely that the buyer had the financial ability to close escrow," Smith said. "They included a pre-approval letter with their offer and a 20% down payment. We were in escrow on another property and needed the proceeds from the sale of our old home for the down payment on the new home."
In addition to obtaining pre-approval or pre-qualification letters, there are other financial tactics buyers can try to make their offers stand out.
Mike Ferry, an Irvine-based real estate sales expert with a national following, advises submitting an offer as close to the listing price as possible. In cases where the buyer wants the home badly, he recommends offering an amount above the purchase price. And Ferry suggests buyers increase the deposit.
"The standard deposit is 3% of the selling price," he said. "Offer a 10% deposit."
Tailor-made terms
After price and financing, contractual terms can be deal makers. Some sellers are interested in long escrows, others in the shortest ones possible. Frequently, an agent is comfortable with a particular title or escrow company and the seller wants the agent to be working with a known and reliable entity.
A seller in a hurry to move will probably decline an offer that makes the purchase of the home contingent on the sale of a buyer's home. Increasingly common are sellers who want to make sales contingent on their finding homes. The buyer who is not in a hurry to take possession becomes more attractive.
Some savvy buyers are even modifying the boilerplate terms in the standard residential purchase agreements to make offers stand out.
Hooman and Erika Ghaffari were among four parties who had presented offers on a Woodland Hills townhouse. Each offer was above the $415,000 asking price. The Ghaffaris' offer, although not the highest, was accepted because it presented a strong overall package that included the modification of several standard contingencies to benefit the seller.
The Ghaffaris' agent, Randy DiSimone of Re/Max Olsen & Associates in Northridge, shortened the home inspection contingency period from 17 to seven days, reduced the loan contingency from 17 to 10 days and removed the appraisal contingency completely.
The buyers also gave the owner the option to stay and rent back for up to two months, a factor that was important to the seller. The strategy paid off.
"My clients wanted to do everything to get the seller's comfort level to a level 10," DiSimone said.
*
(BEGIN TEXT OF INFOBOX)
How to get the edge
Real estate agents experienced in multiple-offer scenarios suggest these tips to buyers.
Don'ts:
* Don't use an inexperienced agent. Find an agent with a good track record and reputation in the neighborhood.
* Don't say anything negative about the home in the presence of the seller or the seller's agent.
* Don't load down the offer with contingencies.
* Don't offer to purchase personal property unless it was advertised as part of the listing.
* Don't mention remodeling or tearing down the house in the presence of the seller or agent.
* Don't delay in responding to a counteroffer or requests for information.
* Don't make an offer below the asking price if the home is fairly priced.
Do's:
* Be immediately reachable from the time the offer is made through acceptance.
* Sell a current home first.
* If comfortable with the seller's counteroffer, sign it immediately and return it without changes.
* Agree to the seller's title and escrow company choices.
* Write a letter to the seller expressing why you are right for this house.
* Offer a deposit above the standard 3%.
* Have the broker submit the offer in person if possible.
* Provide a pre-qualification letter or pre-approval letter from a reputable lending institution.
* Provide evidence of job history and proof of funds so that the seller will feel confident of your ability to purchase the property.
* Consider shortening the standard contingencies in the residential purchase agreement.
Wendy Jaffe can be reached at
wjaffewrite@aol.com.
