Lesson 8 Making an Offer That Stands Out: Winning in Competitive Situations
It's not always about the highest price. Learn how to craft offers that sellers can't refuse, even in today's competitive market.
The Art and Science of Offer Strategy
Your offer is a complete package, not just a price. Sellers evaluate the likelihood of a smooth closing, flexibility that works with their timeline, and your overall strength as a buyer.
Strategic Approach
Every element of your offer – from price to contingencies to closing dates – can be strategically adjusted to make your offer more attractive while still protecting your interests.
Agent's Role
Your agent will run comparable sales to help determine a strong, fair offer price and present your offer professionally, highlighting all of its strengths.
Remember: Offers can be varied to be or appear stronger, and your agent plays a large role in this process.
Beyond Price: Elements That Make Offers Attractive
1
Down Payment Amount
A larger down payment signals financial strength and reduces the risk of financing issues. 20% down is often more attractive than a slightly higher price with minimal down payment.
2
Flexible Closing Dates
Some sellers need 60-90 days to find their next home, while others want to close in 30 days. Being flexible with timing can be as valuable as offering more money.
3
Appraisal Gap Coverage
Agreeing to pay the difference if the house doesn't appraise for your offer price shows the seller you're serious about getting the deal done.
4
Earnest Money Deposit
Consider offering larger earnest money deposits (3-5% instead of the typical 1-2%) to demonstrate that you're serious and financially capable.
The Strategic Use of Contingencies
Important Safety Tip
Never completely waive your right to inspect, but you can make your inspection contingency more seller-friendly.
Inspection Contingencies
- Shorter inspection period (3 days instead of 5)
- Limited repair requests (only items over $1,000)
- "Information only" inspection (you can walk away but won't ask for repairs)
Financing Contingencies
- Shorten the financing contingency period
- Include a pre-approval letter from a well-known local lender
- Offer to provide additional financial documentation quickly
Sale Contingencies
- Show that your home is already listed and priced competitively
- Include a "kick-out" clause allowing the seller to continue marketing
- Provide evidence of strong buyer interest in your property
The Power of the Personal Letter
Sometimes, connecting with the seller on a personal level can make a difference. A well-written letter can tip the scales in your favor, especially when offers are close in terms of price and terms.
When Letters Help:
- Family homes where sellers have emotional attachments
- Situations where multiple offers are very similar
- Unique properties where the seller wants the "right" buyer
- When you have a genuine connection to the home or neighborhood
What to Include:
- Why you love the specific house (not just generic compliments)
- Your plans for the home and how you'll care for it
- Personal details that create connection (family, pets, hobbies)
- Keep it to one page and make it genuine
When NOT to write letters: Investment property purchases, corporate or bank-owned properties, when your agent advises against it, or if you can't be genuine about the property.
Your Agent's Critical Role in Offer Strategy
Market Analysis
- Recent comparable sales in the neighborhood
- Current competition and market conditions
- Pricing strategy based on property condition and location
- Understanding of what similar properties have sold for
Offer Presentation
How an offer is presented matters tremendously. Your agent will:
- Call the listing agent to build rapport and understand the seller's priorities
- Present your offer professionally, highlighting all strengths
- Explain why you're a strong buyer and why the deal will close smoothly
Negotiation Strategy
- Understanding the seller's motivation and timeline
- Knowing when to be aggressive and when to be conservative
- Crafting counter-offers that move negotiations forward
- Protecting your interests while making the offer attractive
The "Best and Final" Process
The common practice of "best and final" offers happens when sellers receive multiple offers and want one final round of bidding. Here's how it typically works:
Initial Review
Seller receives multiple offers and reviews them with their agent
Selection
Top 3-5 offers are invited to submit "best and final" offers
Deadline Set
Specific deadline is set (usually 24-48 hours)
Final Submission
Final offers are submitted with no opportunity for further negotiation
Decision
Seller chooses the best overall package
Strategy Tip
Don't go beyond your budget just to win - there will be other houses. Increase your price if you can afford it, improve your terms, and address seller concerns that your agent learned during the process.
Common Offer Mistakes to Avoid
Lowball Offers in Hot Markets
In competitive markets, offering significantly below asking price often just eliminates you from consideration. Your agent will help you understand what constitutes a realistic offer.
Too Many Contingencies
While you want to protect yourself, an offer loaded with contingencies can lose to cleaner offers even if your price is higher.
Unrealistic Timelines
Don't promise a closing date you can't meet, or request timelines that don't work for the seller's situation.
Generic Personal Letters
If you write a letter, make it specific to the property and genuine. Generic letters are obvious and can backfire.
Not Understanding Seller Priorities
Your agent should learn what's most important to the seller – price, timing, convenience, etc. – and structure your offer accordingly.
Structuring Competitive Offers
Example Strong Offer Structure for a $500,000 Listed Property:
$515,000
Offer Price
If comps support it
20%
Down Payment
$103,000
$15,000
Earnest Money
3% of purchase price
$10,000
Appraisal Gap
Cover up to this amount
What Makes This Strong:
- Competitive but not reckless pricing
- Substantial down payment shows financial strength
- Large earnest money demonstrates commitment
- Appraisal gap protection reduces seller risk
- Reasonable but limited inspection contingency (3 days, repairs over $2,000 only)
- Quick financing timeline (21-day contingency) with strong pre-approval
- Flexible closing accommodates seller needs (30-60 days)
The key is balance – being competitive enough to win while being smart enough to protect yourself.
Understanding Seller Psychology & Special Situations
What Sellers Really Want:
- Certainty that the deal will close
- Convenience and minimal hassle
- Timeline that works for their situation
- Financial security with strong buyers
- Respectful treatment throughout the process
Special Situations:
- Estate Sales: Be patient with decision-making timelines and respect sentimental value
- Divorce Sales: Expect complications as both parties must agree to terms
- Investor-Owned: Focus on clean, quick closings with minimal contingencies
- Builder/Developer: Different negotiation dynamics with potential for upgrades
Your Offer Action Plan
Before making an offer: Review your budget, discuss strategy with your agent, prepare financial documentation, consider your must-haves, and set your maximum price before emotions take over.
During negotiations: Stay flexible on terms that don't affect your core needs, respond promptly, trust your agent's guidance, don't get emotionally attached, and be prepared to walk away if terms don't work for you.
Thomas Brady SFR, e-PRO, SRES, BPOR,C_REPS
Licensed Associate Real Estate Broker/ Director of Operations
Notary Public, Retired N.Y.P.D. Lt., U.S. Air Force Veteran
Vintage American Realty LLC.
1551 Montauk Hwy. Suite E
Oakdale, NY 11769
631-682-8660