Ah the love letter… in today’s raging hot market, with extremely low inventory and bidding wars becoming the new normal, it’s become almost a necessity for prospective buyers to include a love letter in their offer package to sellers. These love letters are written to essentially attract the sellers’ attention and explain the many reasons why they should pick you as the buyer.
However, as love letters become more popular there are also more warning signs being thrown up. The National Association of REALTORS® warns that sending love letters could open real estate professionals and their clients up to fair housing violations. In fact, last year, Oregon was the first state to ban buyer love letters.
There are, however, alternatives you can consider in order to get a leg up on the competition:
Adding things to a love letter like photos of you and/or your pets is a novel approach, but that’ll likely have a negligible effect on the seller. At the end of the day, money talks. The best alternative to a love letter is cash. Be sure to always make the highest offer that you are personally comfortable with, not the number that you think will be highest.
An alternative to this is the all-cash offer. Of course, making an all-cash offer is not possible for most buyers, and if another buyer can offer all cash, then they’ll likely be the buyers who end up purchasing that particular property. However, there are other avenues that you can take, including companies like Ribbon, Knock and FlyHomes that can lend you money to make an all–cash offer.
In the current competitive market that’s already full of contingencies, a great alternative to sending a love letter to the sellers is to waive one or two of these contingencies and reduce the burden on them.
Removing the financing contingency and/or the appraisal contingency can do a lot more to make your offer more attractive compared to sending a love letter. During the height of the pandemic, many buyers even waived inspection contingencies, although this is never recommended and should only be considered by experienced homeowners.
Tighten the Terms
Another excellent way for you to increase your chances of winning an offer is to tighten your terms. If it’s possible to reduce the timeline from when we submit the offer package to closing, your offer will be much more enticing to sellers. Some tactics for doing this is to shorten the length of the escrow period, as well as getting the loan pre-underwritten so that you can remove the financing contingency completely.
Use an Escalation Clause
Seller’s agents are usually tight-lipped when it comes to the exact number of offers and the highest offer their clients have received. An underused tactic that we can use to make your offer package more enticing to sellers is an escalation clause. This clause states the offer, but adds that you will beat any higher offers that are presented by the amount you specify.
This clause is incredibly useful because it gives you the opportunity to present the highest offer. However, you should cap your escalation clause at the highest sum you are willing and able to pay.
Lastly, this step falls on us as the real estate professionals. Building rapport with the seller’s agent is critical when it comes to increasing your chances of nailing that offer. Naturally, the longer agents are in the industry, the more connections and relationships they make with other agents. But there are new agents entering the industry every day and we need to be able to build rapport with other professionals in a short period of time. This is a vital skill for any agent.
Although love letters are endearing and can have a very real impact on a seller’s decision when choosing an offer, the suggestions listed above are more actionable steps that we can take to ease the stressful home-buying process. Let us know if this information has been helpful, as well as if you have any questions on the best way to go about submitting an offer on the home you hope to purchase! We would love to help you!
Article source: http://blog.rismedia.com/2022/alternatives-love-letters/.