Letters to and from buyers and sellers really work
In this highly competitive seller’s market I always suggest a buyer present a personalized letter of introduction along with an offer for consideration. Combined with a solid, well prepared offer, these letters do work to gain an advantage. They give more confidence to the seller that the buyer is truly interested in their particular home and desires to close a deal.
So what is this really about? I always tell my sellers they should pick the highest offer that will close. There are many factors to consider in the evaluation of an offer. The biggest fear of a seller in a seller’s market is the buyer that wants to put the house under contract and then decide later if they really want to buy it.
Usually, this is a buyer attempting to get a home under contract for a nominal option fee feeling they will miss out if they don’t act quickly. Sellers are attracted to buyers emotionally invested at the time of making an offer, not later. A great real estate transaction has all participants looking for a win win outcome.
In the evolution of contract execution to closing, negotiating power of the buyer increases while negotiating power of the seller declines. The option phase is simply an exclusive right of first refusal. It is overly risk free for the buyer but not the seller. If a contract terminates before closing, the seller loses critical time and more importantly interest from other buyers. Another big issue is financing risk.
An offer price can easily come in above appraised value. Appraisal risk places greater importance on selecting a buyer that will close than the highest offer in most multi-offer situations. Of course, earnest money intends to protect a seller. In reality, the benefit of earnest money in protecting a seller is nominal. No agent or seller can review an offer and predict the future.
A good ethical agent will help the seller evaluate risks and speak to the buyers agent and lender to verify sincerity and details. Good seller due diligence centers around determining the buyer is “in love with home”, has no hidden agenda, and wants the deal to go through. Interviewing the buyers agent and lender is a critical piece of this evaluation. I call it looking them straight in the eye over the phone. I want to hear them stake their reputation that what they say is true.
The best agents and lenders respect the needs of both parties and have a long-term view that ethical behavior is a large part of what it takes to be a success. The good ones are transparent in their dealings and don’t hide risk factors. A letter to the seller demonstrates sincere interest. For a letter to help it is genuine and personalized for the home and situation.
It is easy to see through boiler plate letters that apply to any home. The best letters specifically state why this home is best for them. Recently, I have seen a letter from the seller to a buyer emphasizing benefits and explaining why they can’t take the offer. Advising them in a very heartfelt way why they should give more consideration to accepting the counter. This strategy doesn’t apply to a multi-offer situation. It closed the deal with this home.
Letters don’t take a lot of time and work like therapy. If you write it down you have thought it through and are likely to make a better decision for all involved.
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