All offers contain contingencies, and they’re one area where you can really give yourself a competitive advantage. Common contingencies typically address the home inspection, financing, or the sale of the buyer’s current property. To find out what will appeal to the seller, Zagorsky recommends having your agent call their agent and ask, “Other than price, are there any other variables that are important to the seller?”
Chances are, the seller will want more from the deal than money. Your agent can write the contingencies in your offer to appeal to those desires. Suggesting a flexible close date will appeal to sellers who haven’t found a place to move yet. It takes the pressure off them to find a new home right away. Including a contingency clause related to selling your current home makes your offer less attractive than someone who doesn’t have to wait for their house to sell, so consider whether you can afford to pay two mortgages for a short time. (Or consider a solution like HomeLight Buy Before You Sell!)
While Andrews advises that buyers never waive a home inspection, in a truly competitive seller’s market, you could write a contingency clause with either a flat “yes” or “no” after the inspection. In other words, you won’t request that the seller pay for any necessary repairs; you’ll either proceed with the sale or walk away. To sellers, this means that they won’t have to scramble to find a contractor or pay to fix something for the deal to close.
You can also add an informational inspection clause, which means that you will get an inspection on the house, but you won’t be using the inspection to reevaluate your purchase: It’s purely for informational purposes.
In a buyer’s market, you can add more contingencies. In a seller’s market, you may have to pare contingencies down to the bare minimum, such as financing and a home inspection.
Step 6: Timing
The timing of a sale might matter more to a seller than getting top dollar for their house. Sometimes sellers prioritize getting out of their home quickly over their bottom line.
If the seller is relocating to another city or state for a job, they might have a drop-dead date by which they need to be out of the house. The same is true if they have a closing date scheduled for their new home but need the funds from the sale of their current home to close. In that case, if the sale nets them enough to purchase their next home, they might care more about timing than the offer price.
Step 7: Escalation clauses
An escalation clause allows you to beat another buyer’s offer and stay in the game. An escalation clause will bump your offer up over another offer by a few thousand dollars — or more. Typically, buyers put in clauses with escalation in $2,000 to $5,000 increments, up to a cap.
Ford has been using them in his offers and sees little downside to them (as long as the buyer can afford to increase the offer price). In his escalation clauses, he puts “subject to a verified offer,” which means that the seller’s agent has to show him the other offer in writing. He may also add “subject to appraisal,” a clause that protects the buyer from having to make up the difference in cash if the home doesn’t appraise.
Step 8: Forging a personal connection with the seller
In a competitive market, Zagorsky recommends writing a cover letter. The letter should explain why you love the seller’s home and why you want to live there.
It’s essential to run any letters past your agent to avoid violating Fair Housing laws. These laws prohibit discrimination in home sales based on race, sexual orientation, or other protected classes.
In addition, these “love letters” to sellers can be controversial, and they’re not common everywhere. In 2021, Oregon banned them, but in 2022 a judge deemed the ban unconstitutional. You’ll want to read the market room to make sure you are using your time wisely.
However, when executed well and under the direction of a qualified agent, they can help the seller forge an emotional connection with the buyers. One of Zagorsky’s clients connected so well with the seller, bonding over a shared school district and their kids, that the seller accepted an offer $40,000 less than another offer. He points out that this isn’t the norm, but a good cover letter can be effective.
Step 9: The offer process
After you and your agent have nailed down the specifics, your agent will deliver the official offer letter to the seller’s agent. It must be signed and in writing, as it’s a legally binding document.
