The most important letter you'll submit to a home seller is the
one you'll get from your lender stating that you are preapproved for a
mortgage. Savvy listing agents will counsel their clients to refuse offers from
unapproved buyers, so all the flowery prose of a home-offer letter will mean
nothing without loan preapproval.
Assuming you have your lender's letter, whether or not you also
submit a home-offer letter depends a great deal on the type of market in which
you're buying and the competition.
The Market
When the real estate market has lots of buyers looking for homes
and few houses for sale, it's a seller's market. With the seller in the
driver's seat, purchase offers tend to get cleaner, with fewer demands from
buyers. Offering prices typically come in at or even over the asking price.
When supply is low and demand is high, it's challenging for buyers.
Several regions of the country are currently in seller's
markets. In some of the more in-demand areas of California, for instance, there
are so few homes for sale and so many buyers in the market that almost 6 in 10
homes are selling in multiple offer situations, according to the California
Association of Realtors®. In the second quarter of last year, home sellers
received an average of 4.2 offers.
In San Antonio, Texas, homes are selling quickly and for over
list price, according to Marilyn Moritz of KSAT-TV. The head of the state's
Realtors® association cautions homebuyers in these types of markets that they
shouldn't be picky and that time is of the essence when making an offer.
The Competition
If you're unfortunate enough to have fallen in love with the
same home that three other people are smitten with, be prepared to do battle.
The chances are good that they, too, are preapproved for a mortgage, which puts
you on equal footing. If any of them is waving cash, however, all bets are off,
as the table is tilted in the cash-buyer's favor.
There are several reasons for this, the most significant of
which is that the seller doesn't have to worry about a loan falling through if
the house becomes overpriced in a bidding war. There is no appraisal with a
cash offer. There is no lag time, waiting for final loan approval. Cash buyers
are streamlined buyers, and they usually prevail in a bidding war.
Home-offer letters, however, have been known to sway some
homeowners in this situation – especially those with an emotional attachment to
the home.
The "Pick Me" Letter
The home-offer letter was created years ago to help sellers
stand out from the competition. The problem now is that so many buyers use
them; they may be losing their effectiveness.
Since there is no harm in trying, however, let's take a look at
some tips for the ideal home-offer letter:
Don't be robotic. This isn't a form letter, it's a letter
that you hope will tip the scales in your favor, so put as much personality
into it as possible. Start by using the seller's name in the salutation.
"Dear John and Mary" is far better than "Dear Seller."
Make it emotional. Tell the seller how the home resonates
with you. Even if it's just the color of the walls, tell the seller how much
you appreciate her taste and how close it matches yours. Be sincere in telling
the seller why you fell in love with the home and why you want to live in it.
Explain why they should pick you. Point out your strong points as a buyer,
such as few contingencies, your willingness to increase the offered price, or
your strong credit score that will help your loan approval zip right through.
Keep it brief. Try
not to go over three to four paragraphs.
Keep it upbeat and positive. Sellers don't care if theirs is the ninth
house you've made an offer on. They don't care that you need a one-story
because of health issues. Accentuate the positive and leave the complaints out
of it.
Don't forget to include photographs to help cement the fact that
you are far more than a signature on a purchase agreement.
There's an old saying that is frequently tossed around in
business circles: "People do business with people they know, like and
trust." Helping the seller get to know you, like you and trust you is a
tall order for a short letter, but it should be your goal nonetheless.
Your Local San Diego Real Estate Expert,
