Real estate agents have seen every faux pas buyers can make, and how it can kill deals. Here are the six worst mistakes agents recommend you avoid when making offers.
You’ve found a home you love and it’s time to make an offer. Your offer letter to the sellers sets the tone for negotiations — or it can stop the deal dead in its tracks. In a competitive seller’s market, you can’t afford to start things off on the wrong foot.
Real estate agents have seen every faux pas buyers can make, and how it can kill deals. Here are the six worst mistakes agents recommend you avoid when making offers:
1. Lowballing the price too soon
In a seller’s market, a lowball offer is the quickest way to get ignored by a seller.
“Sure, many sellers overprice their properties to start and your offer might be fair, but not everyone is rational,” said Richard Haynes, broker/owner of Manhattan Pacific Realty in Hermosa Beach, California.
You especially don’t want to undercut sellers on price during the first week a home is on the market; that can offend the seller and make them skip your offer, he warns. “Let the market do the talking over the next few weeks, and the sellers will get more realistic,” Haynes advises. “Be patient and lowball once [a listing] has been on the market a month or longer.”
2. Including too many contingencies
Real estate contingencies give the buyer a quick and painless exit plan if certain conditions are not met by key deadlines before closing. These include a buyer’s ability to secure financing, a home inspection revealing costly repairs, needing to sell a primary home first, or an appraisal coming in too low. But when it comes to contingencies in a brisk market, less is more, said Jennifer Murtland, team leader of Team Synergi with Keller Williams Realty in Cincinnati.
“Most sellers are looking for no contingencies, no seller-paid closing costs, and a quick close without having to [sell a primary home] first,” Murtland says. “Make the offer clean and concise. Shortening the home inspection period will also help your offer get placed above others,” she says.
3. Presenting a generic offer letter
A templated offer letter is less likely to sway a seller, all other things being equal, said Kevin Deselms with RE/MAX Alliance in Golden, Colorado. Saying too much can work against you, too.
“It can offend a seller who has an emotional attachment to the home if a buyer includes plans they have to either totally renovate the place or destroy what the seller loved about it,” Deselms says.
He adds that your real estate agent can help you fine-tune the language in your letter to strike the right chord.
Don’t be afraid to get personal about yourself and your family in your letter. Gush about how much you love the sellers’ home — and list all the reasons why, said David Parnes with The Agency, a luxury real estate firm in Los Angeles.
“This can appeal to the sellers’ emotions in a positive way,” Parnes said. “Buying and selling real estate can be an emotional decision on both sides, so it’s important for sellers to feel like the person buying their home will love and care for it the way they did.”
4. Asking for too much leeway
The more demands in your offer letter, the less likely you are to get the house. Things that turn off sellers include: An unrealistically later (or faster) closing date, a lengthy inspection period with a high repair allowance, a low earnest money deposit, and failure to provide proof that you can afford the home, says Jill Hussar, broker/owner of Hussar Real Estate in Lakewood Ranch, Florida.
If you’re offering cash, include bank statements to show the seller proof of funds. When financing, always include a preapproval letter from your lender and proof of funds for a down payment, Hussar says.
Instead of making demands that meet your timeline only, be receptive to a seller’s needs. If a seller needs to move quickly because of a relocation or financial struggles, you could lose the home if you insist on a closing date that’s farther out, says Jessica Foote, team leader of the Foote Team with Keller Williams Realty in San Diego. On the flip side, if the seller needs extra time to close or to rent-back the property and you insist on a shorter timeframe, the seller is less likely to accept your offer if more flexible buyers are waiting in the wings, Foote says.
5. Being pushy about personal property
Having additional appliances thrown into the home purchase helps sweeten the deal for buyers. After all, washers and dryers are expensive — and you’ll need them right away. Ask what appliances are included in your offer letter, and request only those items upfront, Foote recommends.
If other personal property caught your eye during the showing, such as furniture or artwork, negotiate those items after you’re under contract and you’ve agreed on any repairs, Foote says. If you dig your heels in on personal property upfront, you could risk losing the home altogether.
6. Overreaching on the home inspection
A home inspection is a must to ensure you know about unexpected problems with your new place. Getting a home inspection with a licensed professional confirms the property’s condition and uncovers any major issues. But there are caveats.
“Don’t use this as an opportunity to renegotiate the purchase price unless the inspector discovers major, unforeseen issues with the property,” said Justin Moundas of Douglas Elliman Real Estate in Manhasset, New York. He adds that nitpicking on small repairs isn’t worth it.
Think twice before you present a detailed inspection report with demands to address a host of small items that you could easily tackle with a screwdriver and a hammer.
“When you make your initial offer, it should be expected that there are always some minor issues with a property,” Moundas said. “Make your offer accordingly, and always negotiate in good faith.”