If you are buying a home in this market it is highly likely you will be in competition with other buyers. When an owner is considering multiple offers, small details can make a big difference. Here are my top 5 mistakes to avoid when making your offer to ensure you have the best chance of securing your dream home.
Mistake 1. Not attaching a hand written note / covering letter with your offer.
Every owner loves this and if two offers are very close this can be the clincher. I have even seen owners take the second highest offer because the buyer attached a beautiful letter describing how they “could imagine their future children playing in the backyard” etc. It doesn’t have to be long, just thoughtful and genuine (I am happy to help you write it if required). Please note: hardly anyone does this so if you do it your offer really will stand out!
Mistake 2. Not attaching a bank cheque for your deposit.
Yes I know it is a hassle visiting the bank and you will lose out on 2/3 days worth of interest, but it makes your offer look extremely attractive. It doesn’t even have to be as high as 10%. It shows the owner you are genuine, and serious about going ahead. If your offer isn’t accepted your cheque should be returned to you asap without being banked.
Mistake 3. Having long conditions or not doing your research before you offer.
We want you to be protected so please don’t buy any home without completing the appropriate due diligence (eg. builders report, title search, lim report, valuation if required). However there is a misconception out there that if buyers don’t complete their conditions in time they will somehow be punished. If you put down 3 working days for your builders report and the builder doesn’t get back to you in time, then you can ask for an extension. The worst-case scenario might be that the owner doesn’t grant that extension and goes with a backup offer, but if you put 10 working days down to start with the chances of having the owner accept your offer in a competitive situation are next to zilch anyway!
I see buyers miss out on properties every single week because their conditions are too long. Most building inspectors are keen to help and if you ask for a job to be done urgently (eg. within 24 hours) they can usually make it happen. I also often see people that are in a position to make an unconditional offer, instead adding conditions to their offer because “they might as well?”
While I strongly recommend you seek appropriate legal and specialist advice before making an unconditional offer – it is a very good way to make your proposal extremely attractive. Owners will often accept an price that is 5k or 10k lower just because it is unconditional. PS: A title search is really important, but can be as simple as a quick phone call to your solicitor. It shouldn’t need to be a 5 working day condition on your offer.
Mistake 4. Not using un-even numbers.
When I suggest this to people offering they always look at me strangely, so please take note – I am telling you this really does work. Say you are going to offer $400k, don’t just offer that amount. A round figure like that looks like it has been plucked out of thin air. Do this instead – On your offer form write down $380k, cross it out, then write down $395k, cross it out, then write down $401,780 (or something to that effect). This seriously works. Another reason for doing this: If you have ever used the autobid feature on Trademe you will understand this example – you would never put and auto bid at just $50, you would always put a little bit more (like $53) just incase someone else is bidding around the same amount. The same principle applies when buying a home.
Mistake 5. Not getting to know the market.
The real estate agent should provide you with reports showing recent sales in the area that may be useful as comparisons, along with an extra report if requested showing the last 30 sales in that suburb, giving you average sale price compared to RV (a very useful number to know!). How can you make an informed decision on price if all you know is the RV??
Till next time,
Real Estate Blogger