If you thought saving for a down payment was the biggest challenge of buying a home in San Diego, guess again. Now that you’ve finally found that perfect dream home and you’re ready to make an offer, you face the next hurdle; getting your purchase offer accepted. Here are five tips to help you make the deal.
1. Include a Personal Note
Many home sellers have a strong emotional attachment to the home they’re selling. Maybe they’ve lived there for many years, watched their children grow up in it, or worked hard on special remodeling projects and finishing touches. You can make your offer stand out by including a personal note about what the home would mean to you. You could express your appreciation for how well the owners have cared for the home, which features especially attract you to the home, and what living there would mean to you and your family. If you’re genuine and sincere, the sellers may choose you over another offer simply because you love the home almost as much as they do. If you do this, don’t include any personal contact information. Finally, always submit any personal note through your agent; never in person or through the mail.
2. Add an Escalation Clause
Your real estate agent can add an escalation clause to the official purchase offer as long as you have the funds available to back it up. An escalation clause is a written clause that states your willingness to beat the highest offer that the seller receives. For example, the escalation clause might say, “Buyer will pay $5,000 over the highest bid received on this property.” This tactic guarantees that your offer is the highest (although it doesn’t force the seller to take your offer over any others). There are a few precautions to be taken if you use this tactic. First, always state a dollar amount—not a percentage—in order to keep the additional amount a known factor. Second, consider adding caveat language, such as “the highest bid must be from a pre-approved buyer." This will eliminate informal bids from being used as a shill to falsely raise your offer amount.
3. Increase Your Earnest Money Deposit
Earnest money does exactly what it sounds like – it conveys to the seller that you are sincere in your offer. You can emphasize that sincerity by raising your earnest money deposit (EMD) above the minimum. Many sellers will put more weight on offers with a higher EMD. If the EMD only needs to be 1% or 2% (typical in a buyer’s market), you could make it 3% or 4%. In a seller’s market, try to give as much EMD as you can affordably handle. EMD can make a big statement to the sellers with very little risk to you. Remember, if the deal goes through, your EMD money will be used as part of your down payment and closing costs. If the deal doesn’t go through, you may lose only a nominal administrative charge, if that.
4. Don’t Ask for Possessions
It’s surprisingly common for buyers to ask for personal property as part of the negotiation strategy when buying a house. Sellers who aren’t accustomed to this may be taken aback that you’re asking them to throw in the riding mower and the window dressings as part of the deal. Even seasoned sellers may be less inclined to accept an offer from a buyer who asks for extras over another buyer. If you really want the house and there are multiple offers, don’t quibble over “freebies.”
5. Avoid Dawdling
If you’re serious and ready to make an offer, do so with expediency. Avoid dawdling or trying to play some kind of waiting game in a misguided attempt to keep the sellers guessing about your intent. While you’re “cleverly” playing hard to get, another buyer may be already having their purchase offer considered. For a seller who is eager to move on with their life, the earliest offer may be the most attractive.
These five tips for getting your purchase offer accepted can all be accomplished with little or no risk to you as the buyer. Always defer to the advice and experience of your real estate agent in San Diego when submitting your purchase offer. Your agent will be able to guide you toward the most favorable negotiations according to the unique real estate market in which you're buying.