How to Write a Real Estate Purchase Offer that Gets Accepted
As an agent, when you are working with buyers it all starts with finding that perfect home. When you find it for your client, they will be excited and ready to make a real estate purchase offer.
This is where you come in as an agent.
One of the most important things you can do is write the real estate purchase offer. The success of getting the home your client wants is dependent on your offer being accepted – which means it should be well put together!
There will be times when there are multiple buyers fighting for the same property. So you want to make sure that your offer is strong and stands out from the rest.
Let’s start by discussing the basics that make a good offer. There are three key components to consider and factor into your offer.
Give a Good Earnest Money Deposit
One of the basics of a real estate purchase offer is the Earnest Money Deposit (E.M.D.) This is the amount of money that the buyers put down to secure their position in the offer and take it off the market. This deposit is given to a third-party escrow company.
The bigger the deposit, the more serious the buyer.
Because of a higher E.M.D. indicates that the buyer is interested in the house and less likely to back out of the deal.
What is a Good Earnest Money Deposit Amount?
Let’s talk about what amount is considered a good Earnest Money Deposit in the eyes of a seller.
If the buyer puts down 3%, that is considered a very good earnest money deposit. Let’s put this into perspective by looking at an example.
The seller gets 3 different offers from buyers, all for the same price of $1,000,000. What do you think is going to stand out to the seller when reviewing the offers?
- 3% - $30,000, offer #1 EMD
- 2% - $20,000, offer #2 EMD
- 1% - $10,000, offer #3 EMD
Offering 2% is acceptable, but any less may imply that the buyer does not seem serious about purchasing the property.
That’s always a concern for the seller. Because they are taking their house off the market for a buyer, they will want to make sure the deal will go through.
If a seller is looking for a strong offer, this is one element that will make a difference. Especially when the offer price is not a factor.
That brings us to our next point: the offer price.
Offer the Right Price
Every real estate purchase offer is different. But, it’s important to know how much to offer depending on the situation. There are circumstances around every deal that help dictate the price.
If it’s a buyer’s market, there are tons of listings available. So, in this situation, buyers can offer a list price or just below. That’s because they have more listing options to choose from if their offer is not accepted.
In a seller’s market, inventory is low. More buyers are interested in a few houses. So, sellers are receiving multiple offers. In this situation, buyers should make sure their offer is strong since they are competing with other buyers.
In either market, if you want your real estate purchase offer to be considered, it’s important to start the offer at the list price.
Using the Days On Market (D.O.M) to Make a Powerful Real Estate Purchase Offer
Let’s say the house is priced at one million dollars.
What’s an appropriate offer?
Well, it definitely depends on the market, the house, and the sellers. Your job as the real estate agent is to help your buyers put together the best purchase offer with the best chance of getting it accepted.
One way to determine the best offer price is knowing the D.O.M., which stands for Days On Market.
This is the measure of how many days a house has been listed on the MLS for sale. If the listing is priced right, a home doesn’t last long on the market.
If the house has been on the market for a while and there have been no offers, that usually means the sellers will be more motivated. So, chances are the sellers will accept an offer below their asking price.
Using the D.O.M. is one tool to help you decide on price. But, you also need to consider why a home has been on the market for a long time.
Is it just overpriced or is there some other flaw that you’re not seeing?
It’s a good idea to call other agents in the area who may have already been through the house with their clients and see if they have any feedback.
Communication between agents is always helpful since the client gets your expertise PLUS the expertise of your colleagues.
Consider the Contingencies
Another way to improve your chances of your offer being accepted is to have few or no contingencies. Contingencies should only be included on reasonable items.
What is a contingency? A contingency is another way of saying “only if.”
For example, one contingency that many buyers would love to put in is a “sale contingency.” That means that they will only buy the new house ONLY IF their current house sells. But, this makes for a terrible real estate purchase offer.
The sellers are already trying to sell their house. They don’t want or need the stress of waiting on someone else’s house to sell too.
You have to be careful when drafting contingencies. You want to protect your buyer’s interests. But, you also want to present attractive offers that will get accepted. That’s why it’s best to stick to the standard, reasonable contingencies like the loan or appraisal.
If you have a loan contingency with your offer, that means you will buy this property only if you can get a loan on it.
You will buy this property only if the appraiser says it’s worth what you’re offering.
Most sellers will move forward with these restrictions since they are comfortable with these “only if” statements.
Final Thoughts on Writing a Real Estate Purchase Offer
As an agent representing the buyer, you will want to make sure that YOUR offer stands out. So, remember to include these key components to ensure your offer gets accepted.
Once again, make sure to include a good earnest deposit of 3%, offer at least the list price, and have few to no contingencies.
Your well-written offer will let the seller know that your buyer is serious about the purchase and less likely to back out. That means a happy buyer and another commission check in your pocket.
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