What Is Going To Drive Your Offer?

Back in my days in the grocery business we learned about customer’s “drivers” that lead a consumer to make a purchase or shop a certain retailer. Drivers such has happiness and money are part of our everyday life that is why we work, date, have kids or buy a house. It is a common misconception that price is always the driver. In the grocery business other drivers are service, in stock conditions, cleanliness, or location etc. Certain companies’ drivers are obvious, Wal-Mart customers #1 driver is price, where as Target & Publix #1 driver is quality products and service. Drivers are very apparent in the world of Real Estate as well, and they have an affect on the outcome of your offer.

Before you begin the home search, it is important to know your drivers as a buyer. Ever hear the saying “You never get a second chance to make a first impression!” This also applies to real estate offers — negotiating starts with the first offer written. A good REALTOR® will help you work through all of this information. Sellers often tell their agents to not bring a low offer or I am not paying any closing cost. Sellers are often emotionally invested in their homes and some offers will offend them. (By the way, we are bound to present all offers) That is why your REALTOR® should do an analysis of the market and the home to determine the market value. Consider the CMA and your drivers to make your best reasonable offer from the start. Consider some of the non-price drivers below and how they could potentially affect the deal.

Most of all of these drivers should be factored into your offer, the more of a disadvantage you are at on terms you may need to compensate for in price and vice versa, the less negative drivers you have you can be more aggressive in offering price. If the property has been on the market longer than average or the market is not as competitive you can make offers negotiate.

Recently, one of my clients found a new listing that he wanted to buy. It was a beautiful home, priced perfectly — I knew it was going to be super competitive. I spoke to the Listing Agent and they already have 5 offers. I advised my client to think about how much he wanted this home. I knew asking price would not do it. We discussed it and he wanted to make an offer and hope they would counter back. This rarely happens in a multiple offer situation. I also suggested to keep special stipulations request to as few as possible. We asked for a few small personal property items to be left such as a coffee table, we asked for a termite letter and a home warranty. We offered 5% over asking price with the seller contributing to closing cost, quick 30 day close. My client is well qualified using a conventional loan with 5% down payment and 1% earnest money. Pretty solid offer. We did not get it! The sellers took a lower offer with no contingencies attached and a quick close. The listing agent confirmed to me that our offer would have netted the sellers more money in the end. But we are in uncertain economic times and the sellers found a new house they wanted and did not want to risk going though underwriting and having the deal fall apart, money was not their driver in the end.

Please call me If I can ever help you with your real estate needs.