Compete and Win with the Winslow Buying Power Checklist

Know someone struggling to buy in this still tough market? We need to talk. Over the last few years we have helped over 100 families or individual buyers go under contract using our Winslow Group Buyer Power Checklist. We created the list to ensure we use all tools available to help buyers put their best foot forward on the home of their dreams. Not all tools will be right for every buyer, but we can help you assess your situation and put together a deal you can live with that beats the competition.

1)  Offer Cash 

Yeah we know. Kind of obvious right? We know the vast majority of buyers are not in the enviable position of being able to purchase a home with cold, hard cash. But if you can you should definitely go for it. Can’t offer full price but have a nice down payment? Make sure you outline it in the offer and pre-approval if you can support a bigger than normal chunk. This will let the sellers know you aren’t the average financing deal.

2)   Offer over Asking Price

In the first quarter of 2023 we still saw sellers getting 97% of asking price, more in the lower price ranges. Sellers are aware of current market trends and still hear stories about offers coming in over asking price. If their realtor has done her job, she will have priced at a point to encourage offers within a reasonable range based on recent comparable sales which will then allow the market to determine true value. Depending on price range, sellers will receive multiple offers and expect to be at or over asking price. Each situation is different however and we will help our clients consider all the factors unique to the home and situation to put the right offer together. Just know most offers in the lower/middle price range will need to be over asking price to win the deal, especially if we know we are in a multiple offer situation.

3)   Utilize an Escalation Clause

Ah the escalation clause, the buying tool everyone loves to hate. An escalation clause simply states you will increase your offer by a certain amount up to a limit in order to beat any higher offers.

Buyers hate it because it shows their cards to the sellers. Sellers hate it because they want buyers to put their best number up, straight up, without confusing gimmicks. Realtors on both sides hate it because it can be difficult to really compare offers and navigate the process fairly. But guess what? If you are in a competitive situation you want to use one if you can because they win deals. Lots and lots of deals. And we can help you structure it the best way possible for everyone to feel a little bit better about it.

4)   Increase your Earnest Money Deposit

Earnest money is intended to show the seller you have the wherewithal to see the deal through from offer to the closing table. The more you put down, the more attractive your offer is against the competition. Standard in our market is at least 1% of the purchase price. Some clients worry they won’t get the money back if the deal doesn’t go through. However, rest assured if the deal falls apart because of some contractual contingency you will get your money back. And you may find it encouraging to know your realtor holds the money in escrow for you which better enables us to protect it. When your deal closes the deposit gets credited to the sale like cash so it won’t affect your down payment.

5)   Offer a Non-Refundable Deposit or Due Diligence Money

This tool is rarely found in our market but extensively used in other areas of the country and it’s a cool tactic we can steal for buyers which can help you go under contract in competitive situations. Unlike an earnest money deposit, these deposits are given to the sellers directly after acceptance (through an intermediary like a title company) and the sellers get to keep the money even if the deal doesn’t come together for some reason related to a contractual contingency. If the deal does come together, it may still be credited to the sale. It’s not for the faint of heart, but for buyers who are committed to a property and have the ability,  it can help you soar to the top in a multiple offer situation.

6)   Offer an Appraisal Guarantee or Waive the Appraisal

Sellers like cash offers because they know if the home is financed a lender is going to want an appraisal to verify the home really is worth the price the buyer is paying. However, homes are appreciating so quickly in this market it can be a challenge for appraisals to keep up with the trends. If the appraisal comes in less than is necessary to support the loan, the buyer has the option of either renegotiating the purchase price down or making up the difference in cash. As you can imagine, the idea of renegotiation scares sellers who may have a lesser, but still good, offer in hand. Offering to waive an appraisal, or guarantee a certain amount of shortfall, means the buyer takes the ability to renegotiate based on the appraised value off the table, making the offer as close to offering cash as possible without actually being cash. If you have the means to do it, it will help your deal stand out amongst a potential sea of other financing and even cash offers. 

7)   Waive the Home Inspection

Unfortunately, because there is no reporting for it, we don’t know exactly how many deals are getting accepted without a pre-closing home inspection. While the use of this tool has lessened in recent months, we still see it in the most competitive situations. Sellers hate inspections and the laundry list of repairs and issues they always turn-up. Even brand-new construction will have items an inspector recommends to be cured which potentially leads to delayed closings, a lot of hard repair work, or even a renegotiated price.   Therefore, if you are a seller looking at multiple offers you will likely accept one without an inspection, even against a much higher offer that does require an inspection! This is especially true if the home is older or has obvious issues. People like certainty and waiving the inspection offers it to them. That being said, it’s not without the obvious risk and you as the buyer will need to be comfortable accepting the risk against the recommendation of your professional realtor. 

8)   Offer an Inspection Guarantee

Some buyers can’t get their minds around skipping the inspection because fears of major issues or environmental risks with the home haunt them. We totally get it. One option is to go ahead and have an inspection as part of the offer but include language that you will not renegotiate price based on the results of the inspection, or that you will limit renegotiation only to major items of a certain dollar amount or more. This will give sellers reassurance that once they accept your offer over another competing offer your won’t come back and nickel and dime them to death, which is really what they are most trying to avoid as they compare similar offers. 

9)   Agree to a Quick Inspection Time Frame

Possibly the biggest fear for a seller in this market is that the deal they accept will fall apart and they will have to go back through the process of selecting an offer again, starting at the beginning. This is a very valid fear because homes that have been on the market for an extended period or that have been put “back on the market” will often have a stigma associated with them which could reasonably affect price. You can help allay the fear by agreeing to a 5-day or 7-day inspection. The good news is most inspection companies can accommodate this because their volumes are down due to the number of sales declining in our area as a result of lower inventory. 

10) Pre-Offer Informal Inspection

If you have a friend in the home trades with a working knowledge of residential construction, you might think about bringing them along with you to the showing of a home you are strongly considering, or if you think it’s going to be the one, or set-up a second showing for them to view the home. A true inspection goes very deep and should take several hours, however during a showing you can look for the more obvious and scary issues buyers want to avoid, enabling you to have greater comfort with making an offer that does not require an inspection. You could also consider paying someone to do this but it’s likely to be quite challenging in this market where it’s a difficult for tradespeople to get time away these days, especially in peek buying months. 

11) Match the Closing Date to the Seller’s Needs

In general sellers want the fastest closing possible, eliminating uncertainty and interest potentially paid on a mortgage (or two!). Occasionally though, the seller may want to delay closing for some reason. Maybe its tax related and they want to push gains into a different year or quarter or have a 1031 exchange transaction they are timing. Or maybe they want to enjoy one more Northern Michigan summer before selling their vacation home. If your realtor is worth their commission they will find out and help you structure the closing during a time that works best for the sellers. 

12) Offer Extended Occupancy

In this market especially, occupancy is second only to price for many buyers in terms of how they select an offer. If it’s a primary residence for a seller they may need to find a home before they can move or could just want to remain in the home for medical or other personal reasons. Just like with matching the closing date to their needs, a good realtor will ferret this out and use it to your advantage to create an offer that gives sellers what they need. A high-priced offer is meaningless if a seller has to move right away with no place to go. If you can be flexible, it will help you stand out against buyers who aren’t. 

13)  Offer Rent-Free Delayed Occupancy 

If a seller needs to stay for a time, you might consider allowing them to do so free of charge for a portion or all of the time they need to remain in the home. This might be a tougher pill to swallow if you will be paying a new mortgage, but we have seen it make the difference in competitive situations time and time again. We have seen as much as 6 months to a year offered for a seller to remain in a home rent free! That’s on the extreme end but not unheard of, especially when sellers know they may have a tough time buying in this market. 

14) Write a Buyer Letter

A buyer letter is simply a love letter which tells the seller a little bit about you and why you love their home. Some sellers don’t like them and want to make a decision based on “just the facts”. However, most sellers want to know their home is going to someone who will love and care for it for many years to come. If that’s you, it can’t hurt to share a paragraph or two with a few photos. All things being equal, most sellers love to know their home is going to someone who will treasure it, versus flipping it or renting it. Nothing against our investor buyers, but feelings matter to many sellers and if you have a great story you should share it!

We recognize not all buyers are comfortable using these buying tips, and in some cases you might not have to in order to go under contract on your next home. However, these are tools we are seeing deployed in our market and we can’t stress enough how important it is to let us help you evaluate your own situation and put together a plan that will work to help you rise to the top in a sea of potential buyers. We share these tools in a spirit of abundance, and know we are potentially giving away trade secrets to our competition. But as with anything in life, knowing is only half the battle. You need a realtor who has experience in negotiations and in actually executing on all of the above with confidence. We can help. Call or message us today to set up a buyer consultation.

We would be honored to go to work for you. 231-622-5076 or bill@winslowproperties.com.