Have you decided to start searching for a new place to call home? This market can be tricky for buyers, but we are here to help you write a winning, competitive offer. To help you navigate all this, we’ve outlined four important factors that you should consider when deciding how to write a winning offer.
Select a fantastic lender
Sellers often have an offer amount in mind that they would like buyers to meet or exceed. But remember, as a buyer, you need to prove that you can afford to make the purchase—no matter what numbers are thrown around in an offer. If you intend to get a mortgage, there should always be a pre-approval included in your offer & we will help you obtain this from your lender. When you are selecting a lender, make sure to ask how they will help you compete. Lenders who fully complete forms, obtain ample information up front, and are available to speak to the seller's agents when they are reviewing your offer go a long way. Having a solid, well-respected lender will go a long way in winning an offer. If you don't have a lender in mind, we have lenders we can refer you to who check all these boxes.
Consider making a larger earnest money deposit
Next, you may want to consider strengthening you offer with a sizable earnest money deposit, also known as a good-faith deposit. This is a sum of money that you, the buyer, entrusts to the title company to prove that you are serious about purchasing the home. A deposit that’s worth 1% to 2% of the sale price is normal, but the higher the deposit, the stronger the offer. Your earnest money deposit goes toward the down payment when you eventually close on the home. On the other hand, if you break the contract and walk away from buying the home, the seller can potentially keep the deposit as a consolation. With that said, unless you change these terms otherwise, if you cancel during your inspection period, the seller fails to hold up their end of the contract, or you are unable to obtain financing through no fault of your own, your earnest money is safe. This includes having an appraisal that comes in below the agreed upon purchase price. When you write your contract, we will go over this in much more detail & specifically base it on the terms you are writing.
Consider adjusting contingencies
In real estate, contingencies are benchmarks buyers set that need to be met for the transaction to continue moving forward. For example, many buyers will want to include an inspection contingency in the purchase contract. In the standard Arizona purchase contract, you will have 10 days to inspect the property and ask for repairs. Some buyers chose to forego inspections; however, we have found that a lot of our buyers are successful simply shortening the inspection period (often to 5-7 days).
Another contingency that is written into the contract is the appraisal contingency. If the appraisal doesn’t match the agreed-upon price of the home, you and the seller will have to reach a new number before proceeding. Some buyers have chosen to included appraisal gap language in the contract. This is language that is added that allows you to still have an appraisal contingency but states that you will pay a certain amount above the appraised value if it comes in lower than the agreed upon price. For example, if you and the seller agree to a purchase price of $350,000 and the appraisal values the home at $345,000 and you have written a $5,000 appraisal gap clause into your contract, you would pay $350,000 for the property. Your loan would be based on the price of $345,000 and you would bring an additional $5,000 to closing.
The caveat here is that anytime a contingency can’t be satisfied, the buyer has a chance to walk away from the purchase with his earnest money deposit in hand. Obviously, from a seller’s point of view, the fewer chances the buyer has to exit the transaction, the better. With that in mind, we like our buyers to write contracts in a way that they are comfortable with while still being competitive. We can help you find balance so that you can make some of your contingencies more competitive without waiving them entirely.
Opt for an ideal closing timeline
Finally, consider your optimal timeline for heading to the settlement table. Moving out is a lot of work, especially if you’ve lived in the home you’re currently in for a while. To that end, you’re going to want to ensure that you write an offer with a closing date that suits your needs but is still favorable for the seller. Timing is everything. While a quick closing is desirable to many sellers, some need more time to move. As a buyer, once we find out what works best for the seller, often it helps you compete to work with the seller's timeline as best you can!
For help buying and selling in Tucson, contact us today!
The Desert Duo of Century 21 1st American
Your Tucson Real Estate Team
Michelle Morton & Sadyna Reino
520-539-0398
tucsonmoves@thedesertduo.com