One of the toughest situations as a real estate agent is representing a buyer in a multiple offer situation. You and your client do your best to submit an offer that is competitive, but you have absolutely no idea how much is necessary to secure the deal.
Obviously, the most important part of your offer is the price. However, there are many other details that may lead buyers to pass up your offer even if it’s the best price. Here are a number of things that might undermine your bid.
Low option fee
The size of the option fee can say a lot about a buyer’s commitment to the deal. A very low option fee ($100-150) may suggest to the seller that the buyer is considering the house but is likely to withdraw during the option period. Even if your offer has the highest price, a seller may go with one with an option fee that suggests the buyer is dead-set on buying the home.
Not offering enough earnest money
Similar to the option fee, the amount of earnest money you put down in an offer conveys how serious your buyer is about this house being “the one.” If your buyer is absolutely convinced that this is the home they want, then you should consider offering more earnest money than the conventional 1% of the sales price, assuming your client has the necessary cash on hand. Few buyers are willing to forfeit 1%, but even fewer are willing to lose 2%.
Buyers who come to the table with conventional financing are more attractive to sellers than those using FHA loans. Obviously, your buyers who are relying on FHA loans are doing so because that is what is available to them financially, so your goal should be to try to counteract the weakness of an FHA loan by strengthening other parts of the offer (option fee, earnest money).
Sending a bad offer letter
It’s a good idea for a buyer to include a letter describing why they want the house, but they need to be careful not to say anything that might offend the seller. There are plenty of no-no’s in the world of offer letters. Describing things you’d like to change about the house, or describing it as a “starter home” or anything else that suggests it’s not a lifelong commitment could turn off the seller.
An unresponsive agent
When you submit an offer for a client, you need to be ready to take a call right away. The seller is going to be anxious to get a buyer under contract, and there’s nothing more frustrating to a seller than being unable to get in touch with the buyer’s agent right away. If they get the sense that you’re too busy or disorganized, they might determine that you are too much trouble to deal with and opt for another buyer.