Are you one of the thousands of buyers looking to purchase a home in Boston or the surrounding suburbs? If you need a mortgage to do so, I am going to make a small assumption that you are, well, just a BIT frustrated. Not only is inventory historically low, but every home you bid on seems to be swept up by cash buyers. It can often be incredibly difficult to compete with cash offers – but it can be done. Here are a few tips to make your next offer more appealing.
1. Inspect Before You Bid – That’s right, get an inspection before you even put in an offer. That way you will know exactly what you’re getting into and the seller will feel more confident that there won’t be any surprises or attempts to renegotiate the price. I saw more than five separate inspectors at a recent open house in Brookline; this strategy is definitely gaining momentum.
2. Understand The Seller’s Motivation – Negotiation 101: Understand your opponent. Gather all the information you can about the seller. Investing in a home is not like investing in a stock. Equity trades tend not to involve emotion, and emotion is a major variable in the housing market. Buying a home is an emotional roller-coaster, but so is selling. Get a read on the seller’s motivations. Is this an estate sale? Perhaps the seller would appreciate an offer that would allow him or her to leave furniture and personal items in the home. Does the seller have a place to move? If not, maybe offer a leaseback option for a few weeks. Selling a home is stressful, and sellers appreciate it when buyers empathize.
3. It May Come Down To Price – If there are multiple bids on the table (especially cash bids), you will need to offer a very competitive price. This situation calls for caution. Be extremely careful to fully understand your personal financial situation and goals. If you strongly believe that this will be the home you spend the next 20 years enjoying, increasing your bid price significantly may correlate with your emotional and housing needs. Keep in mind that the home will need to appraise (unless you choose to remove that from the mortgage contingency). If you think you may relocate in two or three years and will need a quick re-sale, paying top dollar may not be a financially smart move. One negotiation tactic Bushari Group agents have successfully used in specific situations is a very clear and well planned escalation clause. This helps take a lot of the guesswork out of a multiple offer situation.
4. Write A Personal Letter – This plays into the seller’s motivation. Sellers often want to know that the buyer will appreciate the home as much as they did. Sometimes writing a short note about yourself and why you love the home can be the little emotional push the seller needs to accept your offer. This tactic tends to work well with empty-nester sellers who have fond memories of raising their children in the home. Some buyers send photos of their own children with notes about how much they will love the back yard or finished basement.
5. Find Off-Market Properties – One tactic Bushari Group agents excel at is finding off-market properties. Are you searching for a two-bedroom in South Boston for less than $500,000 and can’t find a thing? Great. Our agents perform extensive market research to find properties that meet their buyers’ search criteria. The agents then directly target these home owners through hand-written notes, phone calls and blast letters asking if the owners would consider selling. This has proven to be a fantastic way to find properties in the current low-inventory situation. Also, you won’t be up against a cash offer if there are no other buyers at the table!
Cash offers are a force to be reckoned with. That said, the right negotiation strategy can make your offer much more attractive.