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Making a successful bid on a home

The difference between the market last year and this is like chalk and cheese on Philadelphia's Main Line. Last year, sellers worshiped the ground a buyer walked on, and a buyer could make the most outrageous requests and they would be granted by sellers happy to have a willing and able buyer.

Today, not so much. Today, there are multiple offers on homes within days of them coming on the market and sometimes within hours. So how do you make a winning bid on one of these homes?

There are several ways, put your self in the shoes of the seller and consider what is important to them. It is not always about the money/price for the home, although that is a large element. As I mention to all my buyer clients, price is just one element of your offer.

Price
Settlement Date
Contingencies - Mortgage, Inspections

So lets look at each of these.

Price - you can make an outrageous price offer way over asking IF you are paying cash, and you don't include an appraisal contingency. Whilst appraisers are starting to catch up with the market, sometimes the comps are not there for offers over asking, although the market is driving those prices. So for a seller, a high price that does not appraise and requires them to adjust later may not be the best offer.

Settlement Date - when does the seller actually want to move? Some people need time to organize themselves and pack up, others may be teachers and want to move during the summer vacations, or parents who want a child to finish up their current school this year before moving. Someone else may want to move for a new job in the next three weeks or less. Only by asking can you uncover what the seller wants and try to accommodate that in your offer.

Contingencies - there are many contingencies in an offer, appraisal as mentioned above, mortgage which usually includes an appraisal element, so if you have the ability to make a large down payment waiving the mortgage contingency whilst risky if you lose a job, can remove the appraisal element and make a more attractive offer. Another contingency is inspections of all sorts, some buyers in our markets are waiving these, or if they want to have the inspections they are willing to accept a large deductible to remove the sellers fear that having paid over asking the buyer is now going to try and claw back some of that at the inspection stage. For example a buyer may do inspections, but be willing to absorb the first $5,000 of any required repairs.

Another example of a creative offer I heard on a negotiation class was the following story. An elderly lady was selling her home, it had been on the market for a long time, but no one was willing to offer the asking price which was significant. However one buyers agent had clients who fell in love with the home, and wanted to buy, but not for the asking price. On talking to the sellers agent he discovered the lady's motivation for selling was to set up a trust fund for her grandchildren, and she needed a certain sum of money to do that, hence the price. His clients made a lower offer, but linked it with a life insurance product that would cover the seller for the rest of her life and provide the funding for the trust on her death. The cost of premiums combined with their offer was substantially lower than paying the full asking price the home was listed at originally. A very creative way to obtain a deal and definitely out of the box thinking on this buyers agent part.

These are just a few ideas, I am sure there are many more.

If you are buying or selling on or around Tredyffrin Easttown or along the Main Line we can help you,  contact us or connect

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Making a successful bid on a home
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The difference between the market last year and this is like chalk and cheese on Philadelphia's Main Line. Last year, sellers worshiped the ground a buyer walked on, and a buyer could make the most outrageous requests and they would be granted by… more