Writing a Strong Offer

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Buying a home involves a lot of steps (and steps within steps). Obviously, a very important one is having your offer accepted when you find the right place. Depending on the market, there may be a lot of competition and in such cases, there are ways you can set yourself apart.

1.     Price – This may sound too obvious, but determining the right price in a multiple offer situation can be a complex matter. Generally, when the seller and their agent are determining their list price, they are looking at recent comparable sales to see where the market value may lie. In an attempt to generate multiple offers, they may use the strategy of intentionally pricing lower than the expected sales price to create a bidding war.

As the buyer, you and your agent now have two things to factor in: the comparable sales (which an appraiser will be looking at as well to determine the value and the amount the lender is willing to loan) and the number of offers, which generally increases the sales price with each bid. There is no exact science to how much each bid will increase the sales price over the asking price, but in the numerous multiple offer transactions I have been involved in, I have found each bid increases the price usually 1-1.5% over the initial asking price.

Because the number of offers can directly influence the price the house sells for, I call the listing agent right before offers are due to have as accurate an idea of the competition as possible. Ultimately, you need to know what price you feel comfortable with and can afford. But having the most up-to-date information can allow you to plan accordingly and avoid making the mistake of bidding too low if you are serious about getting the property.

2.     Letter of Introduction – A seller may have 5, 10 or 30 offers presented to them. These are contracts filled with numbers, dates and legal language. For some sellers, the numbers are the only thing that matters. But often I have seen a personal letter introducing the buyer and the reason they love the home being the difference between an offer being accepted and not.

Real estate goes beyond just shelter, and emotions can run deep with, perhaps, years of memories created in a home. If the seller is looking at similar offers, or even offers separated in price, they may prefer someone who is moving into the property instead of an investor planning to rent out the home, or gut and flip it. As long as the seller is not violating fair housing laws by discriminating against a protected class, this is a decision they can make. Be honest in how you represent yourself, but it puts a face to the name with your offer and can help you stand out.

3.     Submit a Full Offer Package – The last thing you want is to give a seller hesitation in accepting your offer because of a small mistake or missing piece of the offer that can cause any doubt that you would move forward to a completed transaction.

The way the offer is presented sets the tone for the entire deal, and you want to make the best first impression. This means you have your pre-approval letter from your lender. This means you have your proof of funds showing you have the money for the initial deposit and down payment. This means you have signed all the disclosures and reports, acknowledging you know everything the seller has provided and are making an educated offer.

Why? Sellers don’t want to have the transaction fall apart mid-way through, due to an issue that could have been identified at the beginning. Multiple offers are created through the momentum of interested buyers, and it is difficult to get that back. I have seen sellers accept a lower price because stronger terms made the deal more secure. When you can show that, aside from some unknown or uncontrollable issue arising, you fully intend to move forward, you have a much better chance of having your offer accepted.

This also involves having an agent that knows the customs and costs of that particular city and/or county. For example, if you are in Santa Clara County, the seller generally pays the title and escrow fees. In Alameda or San Mateo counties, the buyer pays. In Santa Cruz County, it is split 50/50. Those are the customs in those counties, and the way an offer is written can show how experienced an agent is in that area.

4.     Have the Lender Call the Listing Agent - Yes, your offer includes your pre-approval letter if you are getting a loan. But I have experienced outdated letters, or proof of funds that were not immediately accessible because they were in a retirement account or in an overseas account, or loan contingencies and close of escrow dates that were not realistic given the timing.

The buyer’s finances are an important part of the transaction and if the lender can honestly commit to the dates and terms written in the offer and convey that to the listing agent, it will give that boost of confidence in the chances of the deal closing that can mean the difference between which offer is accepted. It also shows that your team of Buyer/Agent/Lender are pro-active and are paying attention to detail.  Again, you are setting the tone for the entire transaction.

5.     Length of Contingencies – This is a sticky issue. Contingencies give you a way to back out of the transaction, without risk of suffering any monetary damages (losing your initial deposit, or a portion thereof). No Contingencies means the chances of the transaction closing are stronger, since the buyer is less likely to back out. But it also takes away a protection for the buyer.

The most common contingencies are Property Condition, Loan and Appraisal. Occasionally you will see a Buyer’s Sale of Property as a contingency as well.  During these periods of time, you are getting answers to very important questions: “Is there anything seriously wrong with the property?” “Will the lender commit to lending on this specific property?” “Does the appraiser believe the property is worth the accepted offer price and based on that, will the lender make the loan?”

A wise seller will spend the money to hire reputable inspectors to answer questions as to the condition of the house, and provide these to the buyer up front. If these reports answer the questions you would look into during a contingency investigation, some buyers choose to waive the Property Condition contingency.

The Loan Contingency is sometimes waived when a buyer is very confident in their financial situation, may be putting a substantial down payment or is just willing to take on the risk. The pre-approval is the start, but after acceptance, the underwriter will decide whether they will loan on that particular property. They already have your financial information, but they’ll ask for updated documents. They’ll need a copy of the purchase contract and the preliminary title report that shows if there are any liens on the property, or anything else that would make it a risky investment. Is the property in a high fire hazard area making it difficult to get insurance on? Did the buyer make an expensive purchase in between the approval and offer acceptance, like a car, that could affect the debt-to-income ratios? These are all things to factor in.

The Appraisal contingency is an aspect of the loan approval, but its own separate contingency. Buyers may waive this if the down payment is large enough where the appraisal won’t affect the loan approval, if the offer price is easy to justify with recent comparables or they are willing to take on the risk. Say that the appraisal did come in low. In a slower market maybe you could renegotiate with the seller to reduce the sales price accordingly. But if they refused, your options would be to back out of the transaction or increase the amount of your down payment to cover that delta. Again, sellers want to see zero contingencies, but there can be significant financial risk of doing that.

6.      Length of The Close of Escrow – This refers to the time from when your offer is accepted (signed and delivered back) to when the deed is recorded with the county and ownership is officially transferred to you.

The length of the escrow period is most often written as 30 days. Depending on the seller’s situation, they may want this to be longer or shorter. If the seller has moved out and the house is sitting vacant, often they want a quicker close of escrow. If they are looking for a place to move to, they may want more time to do that.

If the offer is all cash, closing escrow sooner is easy. With a loan, there are things that need to be accomplished, so the timing can be less clear. More people are involved in the transaction as well (appraiser, underwriter, etc) and delays can and do occur. I’ve seen lenders complete the entire process in 16-21 days, but this is not common. If you are trying to close escrow sooner to make your offer more attractive, make sure the date is reasonable.

Some sellers prefer a longer close of escrow, or to close escrow sooner with the option for a rent-back to remain in the property for a set period of time. Most commonly, this is because of wanting to move seamlessly from one property to the next. Or there may be tax implications and the need the close of escrow after a certain date.

This comes down to your agent communicating with the listing agent to know the needs of the seller, and deciding if you are willing and/or able to accommodate that to strengthen your offer if multiple offers are expected.


Those are the important steps! It is a balance between paying the right price without overpaying, strengthening your offer without taking on too much risk and setting yourself apart from the competition. Communication and Information is key. Good luck on your next offer!