When a seller asks for your highest and best offer, you typically have one shot at getting the seller’s attention. These tips can help you outpace the competition and clinch the deal. A real estate agent is vital to the home buying process because of their knowledge of the real estate market and ability to negotiate on your behalf. They can provide information on the seller’s preferences so your offer hits the mark. For example, the seller might want to close as fast as possible or prioritize cash offers. Your real estate agent can facilitate communication and help you present your offer in the best light.1. Enlist The Help Of A Skilled Real Estate Agent
2. Make Your Offer Irresistible
The point of highest and best offers is for the seller to see which offer is the most desirable. Make yours irresistible through the following strategies:
- Make a cash offer, if possible. Cash means speedier closing since a lender isn’t involved on the buyer’s end. Even if the offer is lower than others, a cash offer is more attractive because it requires less hoop-jumping to get to the closing table.
- Offer a large earnest money deposit to let the seller know you’re serious about the home. A sizable earnest money deposit means you’re dedicating your financial power towards this single deal instead of putting offers in on multiple homes. It also shows you have the means to close the deal and possibly go above the asking price. A typical earnest money deposit is 1% to 3% of the purchase price, so doubling that can make you stand out from the competition.
- Offer concessionsto help the seller. For example, the seller usually pays about 6% of the purchase price as a commission for the real estate agents involved. Picking up this expense means you may pay thousands of dollars more than the purchase price but could land you the deal in a seller’s market. Other concessions include paying off the remainder of the seller’s mortgage and the seller’s attorney fees.
- Fine-tune your contingencies based on your knowledge of the situation. For instance, you could delay the move-in date a few months if the seller wants ample time to move. In addition, if the house has outdated appliances, you could foot the repair bill instead of asking the seller to pay. You can also cancel the appraisal contingency, meaning you’ll pay a specific amount of cash – out of pocket – above the appraisal value to sweeten the deal.
3. Get Your Initial Mortgage Approval
If you can’t make a cash offer, don’t panic; most buyers need a mortgage to finance their purchase. Plus, you can turn this dynamic into an advantage by going into the home buying process with your initial mortgage approval in hand. Your approval letter means a lender has agreed to provide you with a mortgage loan.
This document can give you the upper hand against buyers waiting for their financing to come through. Because sellers generally don’t want to wait on mortgage approvals and risk the deal falling through, they’ll typically pick a buyer with mortgage approval over a buyer without approval. In other words, a sky-high offer without mortgage approval is vulnerable to rejection by a lender, putting the sale in jeopardy.
4. Consider Including An Escalation Clause
An escalation clause can help you stay in the running if your offer isn’t higher than your competition’s. You can set a dollar amount for your escalation clause to surpass other offers. For example, say you offer $250,000 on a home, but you’re concerned another buyer is offering a thousand more. So, you include a $5,000 escalation clause, meaning you’ll go as high as $5,000 more than any other offer. You can set a ceiling for your escalation clause so you don’t accidentally commit to beating a $300,000 on the home (unless you’re comfortable with that price).
5. Respond As Quickly As Possible
Sellers are looking for responsive buyers who move fast on the home. As a result, a seller might sour on the offer with the highest price from a buyer who drags out communications. In addition, if the seller is unsure which offer they like best, your speedy communication can help make the seller’s choice easier.
