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Guide To Making Your Offer More Competitive

Signing a ContractNobody likes to lose.  Especially on a home that you have your heart set on.  Below is a guide I have created to help you put together the strongest offer you feel comfortable with if you find yourself in a competitive situation.

The plus and minus scores I assign are based on a scale of 1-5, where 5 provides the greatest strength.  These scores are based purely on my professional opinion.

The price your offer is obviously the most important variable, but there are a number of things you can do to strengthen your offer without having to pay a lot more than the competition.  Sometimes you can even get away with paying less.

Escalation

  • Less than full price (-)
  • Full price (+1)
  • Full price with escalation in increments of 500 (+2)
  • Full price with escalation in increments of 1000 (+3)
  • Full price with escalation in increments of 2000 or more (+4)
  • Offer a hard money value above list price (+5)

Home Inspection Contingency

  • Home inspection contingency with >7 days to complete (-)
  • Home inspection contingency with <7 days to complete (+1)
  • Home inspection contingency, waiving the ability to ask for repairs (+3)
  • Waiving home inspection contingency (+5)

Closing Date

  • Choosing a closing date that is different from what the seller wants (-)
  • Choosing a closing date the seller wants (+1)
  • Choosing a closing date the seller wants and offering rent back if needed by the seller (+3)
  • Choosing a closing date the seller wants and offering free rent back if needed by the seller (+5)

Financing

  • FHA or VA financing (-)
  • Conventional financing with <20% down (+1)
  • Conventional financing with 20 down (+2)
  • Conventional financing with >20% down (+3)
  • All “cash” (+5)

Lender

  • Online lender or lender with poor reputation (-)
  • Lender with basic pre-qualification (+1)
  • Lender will full pre-approval (+2)
  • Lender that will call the listing agent on your behalf and talk up your qualifications (+3)

Financial Contingency

  • >21 days financial contingency (-)
  • 21 day financial contingency (+1)
  • 14 day financial contingency (+2)
  • 7 day financial contingency (+3)
  • < 7 day financial contingency (+4)
  • No financial contingency (+5)

Appraisal Contingency

  • >21 days appraisal contingency (-)
  • 21 day appraisal contingency (+1)
  • 14 day appraisal contingency (+2)
  • 7 day appraisal contingency (+3)
  • < 7 day appraisal contingency (+4)
  • Offer to cover a portion of the appraisal deficit if it happens (+4)
  • No financial contingency (+5)

Earnest Money Deposit

  • Equal to <1% of the sales price (-)
  • Equal to 1% of the sales price (+1)
  • Equal to 3% of the sales price (+2)
  • Equal to 5% or more of the sales price (+3)

Miscellaneous

  • Buyer paying for own termite inspection (+1)
  • Buyer using a well know settlement company (+1)
  • Including a heart felt letter from the buyers about why they love the home (+1)

Consider these to be advanced techniques that you should discuss with your realtor and lender!

  1. Mark Hide

    Great article Adam. Direct and to the point – buyers need to pay attention and learn from this article.

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