It’s no secret that we are currently in a hot real estate market. As a buyer, that means you’ll be facing strong competition for any property you might want to bid on. A compelling offer letter, whether you’re shopping on the commercial or residential side, could help you stand out in a sea of buyers. Here are a few great tips on what to include, and in some cases, not.
Tip 1: Make it Personal
Getting a bit personal with your offer can tell the seller a bit more about you and help them see why you would be the best buyer for their property. Address the seller by name, share something about yourself or your family and let them know how excited you are about the potential of living or working in their property. Mentioning a specific area or characteristic you love, like the spacious yard or crown molding, is always a plus.
If you are purchasing a residential home, remember, to the sellers this isn’t just a piece of property, it’s THEIR home. Inside the walls, they’ve shared emotions, celebrated birthdays, maybe raised a family and made many memories. They want the next person who lives there to love it and care about it as much as they did.
If you are purchasing a commercial property, the property owners are invested in themselves by starting or running a business that paid the bills, put kids through college and gave them the opportunity to live their dream. Let them know you intend to do the same and include a brief bit about what you intend to do with the space and the hopes you have for success.
Tip 2: Be Clear About Finances and Terms
In addition to the personal side of a real estate deal, you can’t lose sight of the transactional side. The seller needs to feel confident you have your financial ducks in a row, so to speak. Along with the offer price, having your financing in order shows the seller that your offer can be taken seriously. Be clear on exactly what you plan to offer and how you will pay for the property, and how much earnest money you are willing to put down—the typical amount is 1-5%.
Be sure to include your mortgage pre-approval letter so the seller knows you’re likely going to be approved for financing. And always include an expiration date on the offer. No matter how badly you want it, you should specify the time period in which the seller can reply so you’re not stuck in limbo for days or weeks on end while they wait for better offers.
Whether you are purchasing a home or commercial property, along with the above, it is also a good idea to include contingency clauses. This protects you and your earnest money in the case the sale falls through due to financing, property inspection or other unforeseeable events that cancel the sale.
Tip 3: Be Persuasive
The power of persuasion is real. In this market, sellers are inundated with offers and letters and it’s often the little things like courtesy, personal connections and great offer letters that will win the seller over. Your purchase—and their sale—is personal, so don’t be afraid to put it all on the table in your letter.
Always thank the seller for their time and consideration. Reiterate your appreciation for the property, your desire to own it and how much you will cherish it and take care of it. This is your chance to show the seller who you are and why you are the best choice for their sale.
Other options to include in your offer:
- Escalation clause. If a competing offer is more or the same as yours, you can offer 5-10% above the competing offer.
- Backup offers. These are good for properties that have a contract accepted. You can use a phrase such as, “In the event the sellers do take another offer…” One of our successful agents shared that about 50% of her buyers ended up getting their property with a backup offer, because the initial offer fell through.
Things to Avoid in An Offer Letter
While making your offer letter personal, sometimes we mention things that the seller either can’t relate to, may be opposed to or are simply against the rules. Knowing what not to include will keep your letter compelling and persuasive, without being offensive.
- Don’t mention religious holidays. While a statement like “We'd love to be in our new home by Christmas,” might feel innocuous, you need to keep in mind that not everyone practices or views religion the same. Although the Federal Fair Housing Act makes it illegal for a seller to discriminate based on religion, race, color, national origin, sex, family status or disability—a claim based on what’s in an offer letter can be difficult to prove in court.
- Stay away from desperate phrases that imply you would do anything for the property. Same goes for telling the seller you are on a tight timeline to buy—this could cost you thousands more than what the seller may already be willing to accept. Avoid getting too emotional and keep logic in place.
- Pets. You may love your four-legged or feathered family member, but a seller may not feel the same way. They may have had a bad experience or simply be concerned for their neighbor’s safety. Only if you know for sure that the sellers love dogs, mentioning yours in an offer letter could help you find common ground.
Getting Help with Your Offer Letter
Now that you know how to write a compelling offer that puts you at the top of the seller’s list, grab a cup of coffee, sit down and start writing the offer of your dreams. With Barkett Realty by your side and your fantastic offer, you’ve got this.