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By all measures, 2021 is expected to be another hot seller’s market, but there are some steps buyer’s agents can take to help their clients’ purchase offers stand out in a bidding war, according to panelists at Inman Connect on Tuesday.
In a session called “Top Tips for Crafting Stronger Offers,” F. Ron Smith, founding partner of Los Angeles-based Smith & Berg Partners at Compass and Dalys Keith, certified luxury home marketing specialist at Coldwell Banker Realty in Bethesda, Maryland, spoke with moderator Joe Rand, executive director of the Broker Public Portal.
Here are their top tips to make sure buyer offers are seen in the best possible light:
1. Set buyer expectations
Before an offer is even a twinkle in someone’s eye, agents should make sure buyers know what they’re in for so that they can take the steps necessary to move quickly and complete a successful transaction.
“Once we’ve had that discussion, they understand the market, they understand what is expected of them, then we start the whole process and we’re on solid footing right there,” Keith said.
2. Set your buyer up for success
“We make sure that the buyer’s qualified,” Smith said. “We make sure that the buyer is educated to the comparables in the area.”
3. Call the listing agent and ask them what they need and what the seller needs
Some listing agents prefer to use certain contracts over others or want terms in a particular order or have other preferences that could impact how favorably they view an offer — find out what those are.
Similarly, ask what the seller needs aside from the highest price, Keith said. Do they have a preferred settlement date? Do they need a rent-back?
“I think that’s a really smart idea to be really responsive to the seller,” Rand said. “It signals to the seller’s agent … that ‘hey, I’m going to work with you and I’m gonna play ball.'” It also shows a level of professionalism, which listing agents will appreciate, he added. “It’s really important to the listing agent to perceive you as somebody that you’re going to be easy to do a deal with.”
4. Google the seller
Once you know who the seller is, find out if the buyer knows someone who knows the seller, according to Smith. “Familiarity breeds a much easier transaction,” he said. Ask your team if they know anyone with a connection to the seller, and ask them to check with friends and family.
“There’s nothing better than an acknowledgement from a friend or a family member saying, ‘You know what, I know Ron and Tracy. Their kids go to our school, we know them.’ We’re looking for something that’s going to create a separation, something that’s going to make us stand out,” Smith added.
5. Read the MLS sheet
“Find out what’s important to the seller through the way the copy is written and then address that in the offer,” Smith said.
For instance, he had a buyer who wanted to put in an offer on a home that ultimately received 14 offers whose MLS copy raved about the front yard, the landscaping and the roses. So in a cover letter to the buyer’s offer, the buyer “marveled at how great the landscaping was” and offered to transplant the rose bushes to the seller’s new home at the buyer’s cost.
“You want a differential,” Smith said. “With 10 offers, what’s gonna make that person stand out? And what ends up happening [is] ‘Oh, that’s the buyer that loved our roses.’ It’s all about the details because you want to pull a couple of heartstrings as you’re going through this.”
6. Sweeten the deal
Keith advises her buyer clients to not just have a “healthy” down payment, but also put down a big earnest money deposit.
“If something goes wrong with the agreement, that earnest money deposit can hang out there and not get back to the buyer for awhile,” she said. “So the fact that they’re making a really hefty EMD, they are saying, ‘I really intend to go through with this.'”
She also advises buyers to be flexible about move-in and settlement dates and to offer items that go toward a seller’s bottom line, such as a free rent-back for a certain period of time or an offer to pay their closing costs or help with their moving expenses.
“What’s important is trying to figure out what it is that the seller is going to care about or the listing agent’s going to care about and then trying to throw those in if indeed your side doesn’t care about them,” Rand said.
7. Have another agent and the lender put in a good word
“If you’re representing a buyer in an area or in a property where you don’t really know that agent, that’s the perfect time to start making those calls,” Smith said. “‘Hey, does anybody know Ron Smith? Can you give me some background on him? If you do know him can you put in a good word for me?’
“I also think it’s critical when you’re making an offer it always helps to have your lender put in a call to that listing agent and say, ‘You know what, these guys are legit. I’ve gone through their paperwork, and they’re solid.’ It’s a third party endorsement that goes strong.”
8. Send a love letter
Sellers rarely, if ever, get an opportunity to meet buyer clients, so a letter of introduction is a way to create a bond, Smith said.
“It could be a buyer talking about what they like about the house, what their intentions are, where they’re from, where their kids go to school, where they frequent restaurants, some familiarity that humanizes the process,” he said. “Because even if you’re the only person making the offer, it’s an emotional process. You’re selling your home and you want to know that you’re selling your home to a very qualified person, financially, but also, you want to feel good about it.”
Rand cautioned that agents should be aware of the possible implications for fair housing and using such letters with some buyers and not others. “You got to be careful about being consistent and you got to be careful that the love letters are often seen as a proxy for enabling discrimination,” he said.
9. Prep for inspections and appraisals
“I think one of the most important things you can do is just literally say to your buyer these two things might come up and be prepared for them,” Rand said. “Every inspection shows issues, and in a hot market we might have appraisal issues, so be prepared that something might come up later on.”
Buyers should know that that’s not an opportunity to re-negotiate the deal and expect seller concessions, according to Smith. In some markets, appraisals are being waived or if an appraisal comes in low, buyers are paying for the difference, Keith said.
“What that goes back to is structuring the offer and doing our homework upfront,” Smith said. “If our client is qualified, whenever we can we waive the loan and appraisal contingency.”
10. Tee up a home inspector
“It’s really important to have great relationships with inspectors because as short a contingency period as you can get, you’re going to shine like a rock star,” Smith said.
Keith agreed and said when she’s presenting an offer she has an inspector on standby prepared to inspect within 24 or 48 hours. “It helps me push my offer in,” she said. “‘Accept my offer now, so that we can do the inspection and get that contingency out of the way.'”