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Offer Up, Washtenaw County
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For the past several years a recurring story we have told is that inventory remains tight. In 2018 with only 425 available listings we were reporting on tight inventory levels and intense buyer competition. Since the pandemic hit, inventory levels have been slashed in half. Current active inventory sits at 172 single family homes, which is only about half as much of the average of 423 we have had over the past 5 years. New listings have been slow to return to the Washtenaw market, we still have a long way to go to reach somewhat normal inventory levels. In the meantime, buyers will be forced to compete for the best listings. Here are 10 strategies to help you win those prime properties against the competition.
1. Cash Offer—Cash is king and eliminates potential risks perceived by seller. Not everyone has the luxury of paying cash, but don’t overlook this possibility when discussing options with buyers.
2. Escalation Clause—This method is intended to squeeze out the competition by offering “$xxx” more than any other offer received. Be sure to include a ceiling cap, or you may run the risk of the appraisal coming in short—our next point.
3. Appraisal Waiver or Gap Coverage—If your client has the financial ability to put more down, the offer might include language that covers the difference (usually up to a point) if the appraised value falls short of the sale price. Be sure buyer and lender are on board with this prior to making such an offer.
4. Extended/Free Seller Occupancy—With fewer homes on the market, sellers may need time to find their next home before they can move. Offering to extend post-closing occupancy, or letting the seller stay for free might sweeten the deal.
5. Letter from Buyer to Seller—Building a connection and making the transaction more about the people than the money sometimes helps a buyer gain an advantage. Keep it short, stay positive, and thank the seller for considering your offer.
6. Larger EMD—Money talks. Increasing the EMD sends the message that your client is committed. It helps reduce the seller’s risk that the transaction will fail.
7. Inspection Waiver—You don’t need to completely waive the inspection if you arrange to have your buyer bring the inspector to a showing. Do an abbreviated inspection so it’s taken care of before making your offer.
8. Increase Down Payment and EMD—larger sums of upfront money may reduce the seller’s perception of risk that your buyer will run into financing issues while completing the transaction.
9. Strong Preapproval—The fewer contingencies in the approval letter the stronger it will be. Approval letters don’t need to match your offer exactly. If your buyer can go significantly higher, it may reduce the perception of letters have more holes than Swiss cheese. Work with your client and their lender to make sure yours doesn’t.
10. Be Likable, Professional, and Easy to Work with—It isn’t always the biggest offer that takes it. Sellers often base their decisions on perceived risk and sometimes it’s because they like that you and your client showed respect when you took your shoes off.
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