If you're in the process of shopping for a home, you likely want to know how to make your offer stand out from the crowd. Today, I've decided to go over four components that you can use to your advantage when putting together a strong offer. Read on below to learn how to put together an offer that will undoubtedly capture the sellers' attention.
This is the one component of an offer that everyone knows about, even if they've never been through the process before. However, as the buyer, it might be less of a big deal than many people make it out to be. From the sellers' perspective, the offer price makes a huge difference. The proceeds that they receive from at settlement are the only benefit that they get from the sale of their home. That money could be what they're relying on in order to purchase their next home or to carry them through retirement. It's likely that they have a firm bottom line that they need to meet. However, as the buyer, you're a bit more protected from the impact of a higher offer price. Any increase in price will be rolled into your mortgage and you'll pay for it over the life of the loan. It will likely only make a small difference in your monthly payment. Keep this in mind as put your offer together. While you ultimately have to be comfortable with the amount you agree to pay, if you love the home, it may be worth it to be more flexible on the offer price to put yourself in a better bargaining position.
EARNEST MONEY DEPOSIT (BINDER)
The next thing that you'll have to decide is how much money you want to put towards your earnest money deposit. This money is essentially a downpayment on your down-payment. It shows the sellers that you're serious about buying the home. This money is taken at the beginning of the transaction and held in escrow until you go to closing. If you meet the terms of the contract and follow through with the sale, that money will be applied to your downpayment. If, however, you break the contract, the seller can keep your deposit money in exchange for the loss of the deal. Typically, earnest money deposits range between 1% to 3% of the sale price. However, you're able to put as much money down as you'd like. If you want to show the seller that you are particularly interested in buying the home, putting down a larger deposit can help get that point across.
As the buyer, contingencies are mostly for your benefit. In short, they account for anything that needs to happen in order for the transaction to continue moving forward. Though you can write your own into the contract, these usually account for things like conducting inspections or acquiring financing. Sellers are wary of offers with too many contingencies because each one offers the buyer an opportunity to exit the sale, so keep that in mind as you put your offer together. That said, contingencies are designed to help you move forward with the sale feeling as informed and prepared as possible. Make sure that you elect as many as you need in order to feel confident buying the home.
Closing date is the last piece of the offer to consider. You may have a specific date that you need to move, especially if you've already sold your old home. However, if you aren't tethered to a particular date, it can be a good bargaining tool. You can make your offer stronger by matching the sellers' desired timeline.