It sucks to be a buyer today. Prices are still reasonable, rates are below 4% and affordability as at an all-time high—but there are fewer homes on the market than usual; multiple offers are common and many investors are offering cash.
The competition is tough—especially for those first-time buyers relying on low down payment programs like FHA (.5% to 3.5% down) or VA (nothing down). Many hopeful buyers give up after making offers unsuccessfully on five, six or even more properties.
Some buyers and their savvy agents have found ways to stack the deck in their favor.
First, successful buyers make their offers armed with a strong and credible preapproval letter. An effective preapproval says a great deal more than, “John and Mary Smith are prequalified for a loan up to $300,000.” In order to carry any weight, the preapproval letter must indicate that the lender has verified income, assets and employment and has received an initial underwriting approval. The letter should be recent—and should mention the specific property, purchase price and terms.
Second, successful agents –and their buyers—are writing cover letters to accompany their offers. There was a time when agents would present their offers in person to the sellers in the presence of the listing agent. The buyer’s agent would explain to the seller why this buyer was the most deserving person in the world to own this lovely home.
Now, offers are more commonly sent to the listing agent by fax or email. The buyer and his agent are essentially excluded from the process. The only difference between competing offers is the number of dollars to the seller.
The cover letter from the buyer’s agent sets out how qualified the buyer is. It paints a word picture of the buyers—and explains how much owning this home would mean to them. The buyers write their own letter; and even though it may seem excessive, the buyers’ letter should be full of emotion: why they love this home, how perfect it is for their family and what good care they’ll take of it.
Does this sound a little over the top? Maybe it is—but doing this presents no downside whatsoever. When you make an offer to buy a home, there are two sales being made: the buyer’s agent wants to convince the seller that accepting this offer would be in their best interests, and the buyer is hoping to convince the seller that they will receive an emotional payoff if they accept the offer.
Homes are more than wood and stucco; some of the biggest events of our lives happen there, and we fill them with our own energy and personalities. Our homes become a part of our family. Selling a home is itself an emotional process. Giving the seller reassurance that their home is going to a new owner who will love it and take care of it can often tip the scales in favor of your offer.
Try it. You may find that your new home is just a few heartfelt words away.