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Is buying a home all about the money? You may be led to believe this, but what about factors like conditions, personal offer letters, and the closing date? Sellers often need to consider things past finances when making the decision about which offer to accept.
The reality is, navigating the offer process for buyers can be stressful and putting in the highest offer doesn’t always guarantee the home will be yours. Under seller’s market conditions, when there’s more demand than inventory supply, it’s likely buyers will need to consider more than a full-price offer to increase its desirability.. With this in mind, let’s examine what else sellers look for when weighing the value of an offer.
“There have been several cases where our clients have won without submitting the highest offer, ” says Brett Stein, a REALTOR® and salesperson at Stein Realty Group in Toronto, Ontario.
Pre-pandemic, when offer presentations were still taking place in person, Stein said he and his team prepared their clients as much as possible and showed up to the presentation with a certified bank draft and strong deposit in hand.
“Another offer we were competing with didn’t come with a bank draft, and we assumed they were at a slightly higher number than us. But because our offer was firm … and we were prepared to hand the bank draft over to the sellers to make the deal firm right then and there, we were able to win the property for our clients.”
Fewer or no conditions
“Fewer or no conditions in a climate where the interest rate is higher creates an environment where pre-approvals from the bank are harder to obtain,” explains Stein. “A buyer can set themselves apart by taking care of their financing ahead of time.”
Stein acknowledges this may not be possible for every buyer, but says “if it’s possible, it can give you a huge boost.”
Although conditions can be attached to just about anything, it’s not recommended to remove a home inspection clause, as a home inspection can identify major faults in a home that could lead to issues and unexpected costs down the road. These are some common conditions people attache to offers, and should be very thoroughly considered with a REALTOR® before removing some or all of them:
- Financing condition—a clause in an offer that stipulates a period of time in which a buyer can finalize a mortgage approval for the home they intend to buy. If, for whatever reason, a buyer’s financing is denied or the terms are unsatisfactory to them, this condition allows them to walk away without penalties.
- Status certificate—a document only applicable to condominiums or townhomes managed by a condominium corporation. It contains the financial and legal health of the property. A lawyer should review this document, as it can be lengthy and complicated, to ensure the buyer is not investing in a high-risk building.
- Sale of property condition—a condition that hinges on the buyer selling their home within an agreed period of time, typically 30 days. If the buyer cannot sell their home in the specified time frame, the condition is not fulfilled, so the buyer can walk away with their deposit. An escape clause is an essential part of this condition for sellers as it allows them to continue showing the property during the conditional period and the right to accept another offer. The buyer will also typically have a 24 to 72 hour right of first refusal period.
A flexible closing date
Stein points out, in this real estate climate, some listings on the market are vacant homes.
“This means the owners are currently making their mortgage payments and carrying costs when they aren’t even living in the home or collecting any income on it.” He continues, “In this case, a quick close can give the buyer a huge advantage,” and is attractive to the seller who has a shorter timeline or who wants to essentially collect the money and go. “Some buyers have the ability to close within three weeks and if competing with another offer where the buyer must wait 60-90 days to close, this can win the buyer the property, even at a lower price.”
Although offering a quick close generally strengthens an offer, a flexible closing date can accommodate the seller, whether they want to close quickly or they require a little more time.
Another not particularly common tactic buyers adopt to strengthen their offer in the not-so-traditional market we’re in is to offer to pay part, or in some cases, all of the closing costs, traditionally taken on by the seller.
Write a winning personal offer letter
Many sellers have an emotional attachment to their property and appealing to those emotions through a personal offer letter is a great way to let them know you will love and look after the home as much as they have. Going into detail about how the home is as close to perfect as can be, whether it’s finally having a big enough yard for the kids and pets to play in, or the workshop that will support all your wildest arts and crafts dreams, can help sway the sellers in your favour.
Outside of having the highest offer, there are many creative ways buyers can garner positive attention in a seller’s market. Sellers are ultimately looking for a serious buyer and if you’re willing to prove you’re the one, using methods like the ones we’ve outlined, you can often make your offer even more attractive. Happy home hunting!
