Sorry, I Won't Waive My Home Inspection...
Updated: Aug 18, 2022
5 Strategies to Get Your Offer with Contingencies Accepted
As a local real estate attorney, I’ve witnessed the recent market shift from the feeding frenzy we saw in the spring. But make no mistake, it’s still a seller’s market, and for many buyers, getting to “yes” remains a riddle wrapped in a mystery.
For any property with multiple offers, at least one will be cash, with no contingencies. So game over for any offer with contingencies, right? Not so fast. Since more and more signed offers landing on my desk contain contingencies, I thought I’d share 5 strategies used by enterprising agents submitting contingent offers.
1. What Finance Contingency?
A finance contingency saddles the seller with weeks of uncertainty until the commitment deadline. How do you remove that uncertainty? Provide a pre-approval from an experienced loan officer who relishes the challenge of convincing listing agents how “solid” their buyer’s financing is (provided it is). While the LO can’t disclose specific information, a good one can often convince a wary agent to recommend your buyer over the cash offer with a slightly lower price.
2. Home Inspector on Speed Dial
The home inspection accounts for nearly all terminated transactions. It creates 10-14 days of uncertainty for the seller and shifts leverage to the buyer. How can you minimize that uncertainty? One resourceful agent found a home inspector who can often conduct an inspection within 24-48 hours. With such a short window, a seller can better keep those lower offers with waived contingencies close by as back-ups.
3. Escalation Clause
Whenever the market heats up, escalation clauses reappear from the shadows. They should be used sparingly, and only in highly competitive situations. Buyers should prepare to pay their cap limit price, if successful. Some sellers won’t accept escalation clauses or may be turned off by them. But for the buyer who finds their forever dream home, it could be the key to making that dream a reality.
4. Flexible Closing Date
If your buyer has wide open closing flexibility, then leverage it whenever need and opportunity arise. Pounce when you hear the seller’s plans are uncertain or may otherwise benefit from an extended closing date. Offer a 90 or 120-day closing. If your buyer is financing, some lenders offer long-term rate locks. If the seller needs 6 months, offer a 120-day closing, with a 60-day seller use and occupancy. Have a strategy in place for the seller who needs some love with the closing date.
5. Your Buyer’s Story
Buyer love letters have become discouraged since disclosure of the buyer’s race, religion, sex or nationality could give rise to a discrimination claim. But sharing with the listing agent something compelling or unique about your buyer (while avoiding identity markers) is just good advocacy. Perhaps the property has spectacular gardens, and your buyer is a horticulturalist. Or your buyer is moving back to Massachusetts to care for a sick parent. Or the sellers are from St. Louis, just like your buyers. If it comes down to 2 equal offers, sellers will choose the one they personally connect with.
In the end, the highest offer with the fewest strings generally rules the day. But if your contingent buyer can offer an attractive price, employing these strategies could bring them one step closer to “offer accepted”.
If you’d like to learn more about these issues while earning 2 CE credits, register for our upcoming CE class Real Estate Financing in 2022: Everything a Realtor Should Know in Today’s Market. Hope to see you there.
This article is intended for general informational purposes only and should not be construed as legal, tax or other professional advice. Prior to acting on any information in this article, you should seek legal, tax or other relevant professional counsel.