What to change for strong offer
(Always talk with client before making any of these changes
)
1. Offer price- First and foremost going higher on offering price is going to
make your contract strong. Make sure CMA covers the reason for going
over. If it doesn’t use your best skills in going over as appraisal might
become an issue if you go too high.
2. Earnest money- Since it gets credited back towards your closing cost and
is protected by different parts of the contract (option period, third party
finance, appraisal, HOA, and title liens) you can go higher than the normal
1%. Usually add about a 1000 to 1500 more in earnest.
3. Shortages (Section 6. A (8) )- This is a fee that either the buyer or seller
pay at closing and it usually cost about 100-150. They charge this fee in
every home sale. Check the buyer box while making a competitive offer.
Basically if your neighbor were to start building their fence on your
property instead of getting lawyers involved you call the title company and
they get their own attorneys on the case to take care of it. They pay those
fees with the reserve fund they have of all the shortages charges they
collected. Very small chance this will ever happen to your client.
4. Offer to pay for a survey (Section 6. C (1) )- There are two boxes that
are available to check in this section. One for the seller to pay for a new
survey if the old one doesn’t work and one for the buyer to pay for one if
the old survey doesn’t work. Check the buyer while making a competitive
offer. Most surveys for homes without acreage (1 acre or more) runs from
300-600 depending on lot size.
5. Do not ask for a home warranty (Section 7. H) A home warranty usually
costs anywhere from 400-500 dollars. Sometimes its is not worth that
amount as sometimes home warranty companies can fight repairs causing
your clients headaches. Not all the time but some of the time. By not
asking for a home warranty you save the seller $500 in closing cost
making you offer stronger. If it is an older house thought this home
warranty might be useful so make sure to really weigh the options with the
buyer.
6. Possession- If your client can offer it it is always nice to let the listing
agent know that your client is willing to give a lease back. This gives the
seller a chance to get the proceeds from the sale of their home but not
have to move out within 35 days. If they day require a leaseback just use
PITI per day to figure out what the daily rate would be. Essentially the
seller is renting the house from the buyer.
7. Closing costs- Unless the buyer absolutely needs help with closing costs
do not asking for them.
8. Option period and cost- Going higher on option money and lower on
option days shows the seller how serious you really are. Wouldn’t advise
going higher than 500 on most single family homes in regards to the
option money unless there is nothing in the world that would make your
client back out. Also wouldn’t go shorter than 3 to 5 days on the option
period in order for you to get an inspector out there and negotiate repairs.
Once again though unless the client will absolutely not walk away you
could go 0 days. If you do that though you need to be very upfront with
your client about the risks involved.
9. Third Party Finance- If client is conditionally preapproved or if the lender
is very confident they will get financed dropped the days on the Third party
Finance from 21 to 14 days.