10 Tactics You Need to Know to “Win” the Offer

When you’re in a hot seller’s market, buyers find it challenging to maximize your negotiating power. What are some of the tactics you can use to maximize your chances of having your offer stand out among multiple buyers? If you’re a seller, what terms should you look for in potential offers? I’ve captured 11 common tactics here. But first, the legalese: all of these scenarios carry certain risks and buyers (and sellers) need to understand what risks they are taking and enter into those risks with eyes wide open! Additionally, some of these tactics may not be possible for your scenario and/or may not be desirable for the sellers.

Sold, Horse Property on Furrow Rd, Larkspur, CO

1. Price. It goes without saying that price is an important factor. Buyers who are willing to offer the highest price are frequently top contenders. We see offers 10-15% over asking price. That said, price has to be taken in conjunction with the other terms. You need to make an offer that is most likely to get to the closing table netting the highest bottom line. For example, a really high price without an appraisal guarantee means that the appraiser may be deciding the sales price of the home.

2. Earnest money. Consider increasing the earnest money. A strong earnest money offer typically shows that the buyer is serious about their offer and is committed to getting to the closing table. To make it even more attractive, consider making a portion of the earnest money “hard” after the inspection. That means that the buyer will forfeit that portion of the earnest money if they don’t close for any reason. This is almost a requirement if you need to sell your house first and have a “contingency.”

3. No contingency. In today’s market, most sellers are not going to wait for you to sell your home first so that you can buy theirs. There’s too much uncertainty AND there are plenty of other buyers who are not going to require this. If you do need the equity in your current residence to buy a new home, consider some other strategies like a bridge loan, a post occupancy agreement or a contingency on the sale of that home.

4. Cash (vs a loan). Having an all cash transaction is attractive to the sellers because there are fewer potential issues to get to the closing table. The buyers won’t need to qualify for a loan, the home doesn’t necessarily need to appraise, there is no lender to impose other requirements on closing, etc. While it’s true that the seller still leaves the closing table with the same net proceeds if the buyer is taking out a loan or not, cash simplifies the process.

5. Appraisal Guarantee. Depending on your exact scenario, an appraisal guarantee mitigates some or all of the risk of an appraisal coming in under the sales price. If you’re making a cash offer, consider waiving the appraisal altogether. If you get an appraisal or have a loan, offer an appraisal guarantee. In this case, if you offer $800k with a $25k appraisal guarantee, then the house only has to appraise for $775k. You would bring the $25k “extra” to closing. In most cases, this can be accomplished with a higher loan to value ratio instead of coming up with additional cash at the closing table.

6. Escalation Clause. An escalation clause is a way to compete on the offer price if there are multiple offers on the table by saying you’re willing to be any other offers by a certain amount up to a stop limit. For example, if you offer $800k with a $50k escalation clause, then you’re willing to beat any other offers by $2k up to $850k. This is a way for buyers to compete, but not overpay for the home. For some reason, I’ve seen some sellers and sellers agents react negatively to the escalation clause, but it’s still a good tactic to compete.

7. Post Occupancy Agreement. The buyer allows the seller (or seller’s tenants) to remain in the home for some negotiated period (frequently up to 30-60 days) after closing. This allows the seller time to find a new property and/or move out in their timeframe. The Post Occupancy Agreement can be done with rent required or rent-free. This is one of the tactics that can be the biggest emotional help to sellers. If they don’t know where they are moving to, having the extra time takes a big burden off their transition.

8. Flexible Dates. In some cases, the seller may have specific dates they are trying to meet. In almost all cases, having an aggressive due diligence timeline is helpful to the buyers so they can demonstrate in good faith they are motivated and really want the house. Having a list of inspectors who can inspect the home in a day or two is important. Being flexible about closing may also be attractive. Maybe the seller wants as quick of a close as possible, maybe they prefer a longer close so they can find their new home.

9. Waive the inspection (or limit the inspection to major health, safety items only). I can’t necessarily recommend this option, but it is one that sellers will typically like. If you’re willing to buy the house “as-is,” that goes a long way in easing the seller’s mind. Inspections tend to be the most common reason contracts terminate. But also, some buyers have started using the inspection as a chance to renegotiate on the sales price of the contract. To retain some of your protection, you can write it as you will not raise any inspection objections which means you won’t ask the sellers to fix anything or renegotiate the price of the home, but you retain the right to terminate if the inspection is unsatisfactory.

10. Inclusions / exclusions. Most sellers include common household appliances and “built-ins” in the sale of their home. This can be a bit trickier (read: emotional) to try to negotiate, but if you know that the seller really wanted to keep something which is typically included, you can exclude it in the offer. Likewise, if there’s something you know the sellers don’t want to move, you can consider including it in the purchase price so you get rid of it / take the burden of moving from them. This is probably the least used strategy, but it may come into play, so I wanted to be sure to mention it here.

As always, feel free to reach out to discuss more of these options and other possible tactics that can be used so that your offer is the one the sellers choose! If you’re selling your home, we can also use these tactics to be sure we get a strong offer the first time around. Happy house hunting!