Arlington Virginia (VA) Real Estate – Arbour RealtyHome
Helping You Plant Roots in VA, DC & MD
There are dozens of criteria that add to the sum value of a real estate purchase contract, but it is easy to get tunnel vision and only consider price. Yes, throwing lots of money at an offer can get you the home, but it’s not always the most efficient use of your finances. I like to be aggressive in the negotiating and conservative with your money. Whether you are competing with multiple contracts or simply negotiating the best price, doesn’t it makes sense to strengthen your offer in every category that does not cost you money?
The proven strategies I am sharing below have saved my clients many thousands of dollars and I hope they do the same for you!
1) Earnest Money Deposit (EMD)
In the DC area we are usually able to get away with an EMD equal to about 1% of the purchase price. Sellers prefer to see more because it makes them feel as though you are more committed to the purchase. Assuming you fulfill your obligations under the contract, this money is credited back to you at settlement. Therefore, why not increase the EMD amount to strengthen your offer? Talk to your Realtor about a percentage that makes sense for your situation.
2) Appraisal Contingency
Most contracts request 21 days or more for the appraisal contingency. The regional contract even suggests that 21 days is typical. Sellers prefer for this contingency be as short as possible so they know the outcome sooner than later. Let me share a secret, most lenders can get an appraisal completed in 3 days if they need to. I guarantee you that mine can. Why not shorten the contingency period? Talk to your Realtor and lender to decide on a number of days that they can live up to.
3) Financial Contingency
Like the appraisal contingency, most contracts request 21 days or more for the financial contingency. Again, the sellers prefer for the contingency period to be as short as possible. By working with your lender to get them everything they need prior to writing an offer, they can speed up the approval of your loan. This will allow you to shorten the financial contingency period and strengthen your offer.
4) Home Inspection Contingency
Most contracts request 7-10 days for the home inspection contingency, regardless of when they plan to do the home inspection. If you are writing an offer on Wednesday and plan to do your home inspection on Saturday, do you really need to ask for 7-10 days? The faster you can commit to removing these contingencies, the stronger your offer will be in the eyes of the seller.
5) Termite Inspection
By default, most agents require that the seller order and pay for the termite inspection in the contract. A seller looks at this and sees dollar signs coming out of his or her pocket. This can be one more thing that weakens the contract or one more way to strengthen it. We have relationships with local pest inspectors that allow us to have a termite inspection completed for less than $35. Maybe it makes sense to select that the purchaser cover the termite inspection instead of the seller.
6) Closing Date
The time between ratified contract and settlement is typically 30 days. Many Realtors default to this time frame when preparing an offer. By providing your lender with all the information he or she requires, prior to writing an offer, you will will have more flexibility to close quick or slower. Your Realtor should be learning as much as possible about the seller of any homes you are thinking about making an offer on. If you can accommodate their preference of a quicker or slower settlement, this will certainly strengthen your offer.
7) Lender Pre-Approval
The more complete your loan application and supporting materials, the stronger your pre-approval will be. Compare the difference between a home buyer who has just given the loan officer a few details over the phone to the home buyer who has completed a full application and provided the loan officer with all the supporting material they need. The first is very flimsy, while the second buyer is ready to be funded as long as the home meets the bank’s qualifications.
Please share any questions you have in comments or send me an email.