A seller’s dream is to witness a bidding war, and if the home is enticing to buyers, a bidding war will be the result. As buyers wait for an acceptance or rejection call, a seller sees the bid at a different vantage point.
Few to no contingencies
A bid with a contingency is saying to the seller “The money is yours, but there’s a string attached.” Contingencies are strings, and while sellers are cautious about it, it’s a buyer’s exit strategy. Sellers will entertain one or two contingencies if the buyer’s contingencies are reasonable. A reasonable contingency is a home inspection. Additional contingencies include repairs, appraisals, and mortgage approval. An unreasonable contingency is expecting sellers to wait until buyers sell their home first.
Few to no concessions
Likewise, concessions are stipulations that turn the tide in a buyer’s favor. It’s an unusual string attached because it revolves around what sellers must do for the buyer to finalize the deal. A major concession is a seller relinquishing a percentage of the bid to the buyer’s closing costs. This is a major turnoff for sellers aiming for profits. Other concessions include contributing the buyer’s bid for last-minute repairs or down payments.
Cash vs. mortgage
Sellers prefer to avoid mortgages but will accept it if the offer is reasonable. The hesitation doesn’t come from the attention-grabbing dollar amount, but accepting that a second, yet boisterous opinion is in play. If the seller pursues the bid, he or she must please both the lender and the buyer to sell the home. However, the lender’s opinion matters more. Lender demands push sellers toward cash offers due to the stress-free closing procedure.
Profit or little loss
At face value, the higher amounts are the better offer. Yet, under an agent’s guidance, sellers peel back the outer layer and veer into the details. Is the amount profitable? To decide, let the agent total face value bid minus commissions, all closing costs, home improvements, mortgage interest, fees, buyer concessions, and taxes. The seller compares the answers to determine which is profitable or avoids the least amount of loss.
No seller wants to choose a buyer who doesn’t have finances in order. For sellers pursuing a mortgage bid, a lending company with history is more secure than a startup lender. The seller prefers “approved” or “pre-approved” over “pre-qualified” as pre-approved buyers are closer to obtaining a loan and approved buyers already have one. Furthermore, the agent will compare down payments, mortgage rates, and escrow for the best outcome.
Meanwhile, don’t say cash offer just to entice sellers. Sellers require proof. Reasonable bank account statements, financial documents, and escrow will ease sellers’ minds.
Flexible closing date
The game-changing, yet uncontrollable part of the bid is the closing date. Sellers who prefer to leave ASAP will gravitate toward sooner closing dates while sellers who need time to leave will lean toward longer closing dates. Buyers with flexible closing dates are ideal as sellers can negotiate the right closing date that suits their needs.
Buyers can win the bid by concentrating on both sides of the situation. Continue to focus on the dream home and outsmarting the competition, but focus on the seller’s concerns too to get the dream home. It’s certainly a different angle to consider.
DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation for writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.
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