Thursday, August 15, 2013


As the Washington, D.C. real estate market continues its hot streak, and demand outpaces inventory, buyers need to know what it takes to get a seller to accept their offer in this competitive, multiple contract environment.   To get the answer to this question, I spoke to Long and Foster Super-Agent Ron Sitrin.  Ron, who is ranked in the top one percent of real estate agents nationwide and averages over $30 million in sales volume annually, gave the following advice to make your contract stand out in the eyes of a seller who is considering multiple offers.  Buyers and their agents should consider the following:

  1. Be Price Competitive and Include an Escalation Clause:  For properties where you are expecting to be competing against multiple offers, consider making a full price offer with an escalation clause.  Nothing catches the eye of a seller who is reviewing multiple contracts like more money, although other factors may come into play in the seller’s ultimate decision.
  2. Waive the Financing and Appraisal Contingencies.  Full price offers plus an escalation clause are great, but sellers want to be assured that you can close on the contract.  A contract $100,000.00 over the asking price is meaningless if you can’t close on it.  There are few things that provide more assurance to a seller that a deal will close than when a buyer is paying cash or is willing to waive the financing and appraisal contingencies.  But, before you agree to waive the financing and appraisal contingencies, make sure that you either have the cash necessary to close or your lender has clearly indicated that you will not have any problems obtaining a loan.  If you have waived the appraisal contingency, and the property does not appraise at the purchase price, you will likely need to bring more money to the table since your loan will be based on the appraised value of the property, not the sales price.
  3. Increase the Size of the Earnest Money Deposit.  A large earnest money deposit will show sellers that you are committed to buying the property.  The average earnest money deposit ranges between three and five percent of the purchase price, so if your EMD is more than that, it will stand out to a seller.  Note, however, if you do not close on the transaction, you are at risk of losing the EMD depending upon the terms of the contract.
  4. Shorten the Home Inspection Periods.  You may also want to consider shortening the period of time to conduct your home inspection.  Pre-arrange an inspection before submitting your contract or have an inspection completed before you submit the contract.  Inspection issues are one less contingency the seller would then need to be worried about.  You may also want to consider waiving the radon inspection as the maximum expense, even if there was a radon issue, is not substantial.
  5. Offer a Free Rent Back.  If the seller need some additional time in the property, consider offering a free rent back or reduced cost rent back.  You may also want to determine when the seller is looking to close and pre-coordinate a settlement date to be included in your contract.
  6. Consider Writing a Letter to the Seller.  A heart felt hand written letter attached to the contract about why the seller should sell you the house over other bidders may carry some weight   For many sellers, the house for sale may have been their home for many years, where their children were raised and the site of many important milestones in their lives and they may be interested in learning about who is looking to buy their home and why they want their property. 
  7. Pick the Right Settlement Company.   Okay, this was not one of Ron’s suggestions, but the right settlement company can make a big difference in a contract.  Some settlement companies in Montgomery County charge the seller significant fees – I’ve seen charges up to $850.00 to the seller on a HUD-1 – but Peninsula Settlements does not.  Our flat fee to the seller is only $250.00 and includes everything that we need to do for the seller in the transaction.  We do not charge payoff or recording fees, power of attorney preparation, or courier or delivery fees.  Selecting the right settlement company can put up to $600.00 more dollars in the seller’s pocket, so make sure you list Peninsula Settlements as the settlement company on your next contract.

Please feel to contact me if you have any questions regarding this post or any real estate issue.  Good luck on getting your contract accepted!
Bruce Stern