Strategize

During: Buying Process Overview: Writing Offer: Strategize

Strategize is all about coming up with an offer strategy with your real estate agent. It is the second step in the Writing Offer process.

writing-offer-strategize

The Strategize process is shown below.

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Complete the "Writing Offer: Strategize" checklist:

https://learntoberich.com/strategize/

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When making an offer a major factor is often the price you offer. Typically the higher your offer the better, but a high offer that must appraise is not really a strong offer.

So, discuss with your Real Estate Broker that if you're in multiple offer situation, you may want to offer your highest and best offer but be willing to back it it up with a complementary appraisal condition in your "Contract to Buy and Sell Real Estate".

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Removing your appraisal contingency or limiting your appraisal contingency by saying that you have enough money and are willing to make up the difference should the property not appraise will strengthen your offer.

In normal market conditions where there are not multiple offers and with new construction, removing or limiting your appraisal contingency is probably is not necessary.

However, in multiple offer scenarios and especially when you're making an offer above asking price, discuss with your Real Estate Broker some ways to strengthen your offer by adjusting the appraisal conditions part of the "Contract to Buy and Sell Real Estate".

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Removing your inspection contingency completely or limiting your inspection contingency by saying that you will not present a list of cosmetic repairs will strengthen your offer.

In normal market conditions where there are not multiple offers and with new construction, removing or limiting your inspection contingency is probably is not necessary.

However, in multiple offer scenarios discuss with your Real Estate Broker some ways to strengthen your offer by adjusting the inspection conditions part of the "Contract to Buy and Sell Real Estate".

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The fewer due diligence documents you ask for the less hassle there is for a Seller and the stronger your offer may be.

In normal market conditions where there are not multiple offers and with new construction, limiting the due diligence documents you request is probably is not necessary.

However, in multiple offer scenarios discuss with your Real Estate Broker some ways to strengthen your offer by reducing which due diligence documents you insist on as part of the "Contract to Buy and Sell Real Estate".

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The more Earnest Money you put at risk should you not perform according to the terms of the "Contract to Buy and Sell Real Estate" the stronger your offer is.

However, most sophisticated Real Estate Brokers representing Sellers understands that our "Contract to Buy and Sell Real Estate" is written very pro-Buyer such that it is not likely that a Seller will get to keep Earnest Money if a Buyer acts in good faith and terminates under a legitimate section of the "Contract to Buy and Sell Real Estate".

In normal market conditions where there are not multiple offers and with new construction, raising the Earnest Money you offer is probably is not necessary. However, offering the Earnest Money that is requested in the MLS is expected and offering less is a sign that the offer is weaker in most cases.

If you're trying to make an offer with little or nothing down and don't have or don't want to put up the requested Earnest Money, we may need to explain this and find a sympathetic Seller.

However, in multiple offer scenarios discuss with your Real Estate Broker strengthening your offer by increasing how much Earnest Money is included as part of the "Contract to Buy and Sell Real Estate". This is not in my top 3 ways to strengthen an offer and is not a significant strengthening in most cases.

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If a Seller needs or wants to stay in the property after Closing, then offering a "Post-Closing Occupancy Agreement" will strengthen your offer.

If this is a benefit to the Seller (which we'd often find out either on the "MLS Sheet" or by calling the Seller's Real Estate Broker prior to writing the offer), discuss with your Real Estate Broker including a "Post-Closing Occupancy Agreement" with your "Contract to Buy and Sell Real Estate".

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If you do not require a survey or if you require a survey but agree to pay for the survey in the "Contract to Buy and Sell Real Estate" that will strengthen your offer.

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It is a negotiated item in the "Contract to Buy and Sell Real Estate", but it is often customary for the Seller to pay for the "Owner's Title Insurance Policy".

If you want to make your offer strong by having the Seller net a larger amount without having to worry about raising the offer price and worrying that the property will not appraise, you may want to discuss with your Real Estate Broker offering to pay for the "Owner's Title Insurance Policy".

You will always pays for the "Lender's Title Insurance Policy" unless we negotiate Seller Concessions (which is relatively common) or we add it as an additional provision (which I've never seen done).

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The Strategize stage consists of the following steps with brief explanations of what is included in each step:

  1. Seller’s Ideal Offer – What is the Seller’s ideal offer and what items on there can we easily match that we don’t have strong feelings against? What might we be willing to match to improve the strength of our offer?
  2. Who’s Buying
  3. Price
  4. Seller Concessions
  5. Down Payment
  6. Loan Type and Plan
  7. Inclusions and Exclusions
  8. Inspection
  9. Loan Contingency
  10. Appraisal Contingency
  11. Additional Provisions

Owner’s Extended Coverage

If you’re going to ask for Owner’s Extended Coverage (OEC), realize that this may trigger the need for a survey or, more likely, an Improvement Location Certificate (ILC) for the title company to issue OEC. This is often triggered when the property does not have a lot and block legal description.

Whether a survey or ILC is required and who pays for it becomes even important when you believe title will require one to issue you OEC, so that may be a factor in how we negotiate the Survey and ILC section of the contract.

Owner’s Extended Coverage and New Construction

I still recommend OEC when purchasing new construction. The chance of a claim is extremely rare, but it is good to have in case something unexpected does happen.

Next: Info Required

Once you’ve Strategized with your real estate agent on your offer, your real estate agent will have some Info Required to write the offer.

IMPORTANT NOTE: This checklist is based on what I personally use with clients in Northern Colorado. Please rely on your local real estate agent for how it works in your local real estate market. This process will definitely vary in different States.

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