While demand has come off the peak, we still don’t anticipate seeing a dramatic increase in supply anytime soon. So how exactly do you get your offers accepted in a low supply environment?
In today’s podcast, Jeff and Phil share five strategies you can use to win when inventory is low. Listen in on the full podcast for 2 bonus strategies from the audience.
Press play to listen to the podcast episode:
…or watch the video below…
Or read on to learn more…
Key #1: Agent-to-agent communication
The first key to getting your offer accepted is agent-to-agent communication. Your communication with the listing agent is the most important thing you can do to get an offer accepted. This is tougher with teams as you may not know the right person on the team that manages offers for the client. It’s important to sell your client and the ability of your client to close on the property.
One thing to note is that your credibility comes into factor here. If you’re new and haven’t sold many houses, you may not have any (credibility). The other agent is going to be sizing you up as they form an opinion of you and your expertise. The offers we’re seeing get accepted are when agents communicate early and often. This is why it’s important to build rapport with the listing agent pre-sale. Be respectful with their time, when you communicate, have your questions ready.
Key #2: Be sure it’s received
Make sure your offer is actually received by the person negotiating the offer.
Key #3: Make sure your offer is competitive
It’s hard to know what competitive is. Sometimes no feedback is feedback. It could mean you weren’t aggressive enough. The agent usually cares about “is this deal going to happen?”. Your offer has to be substantially over the others.
Number four on the list of ways to get your offers accepted in a low supply market ties in with number 3. If you don’t execute all of the other strategies above, #4 doesn’t matter.
Key #4: Terms of the deal
Contingencies in the contract include title, HOA, inspection, appraisal, CCNR, SPDS, financing, and leaseback. These are all contingencies that can be waived. When the buyer wants out, you can use any of these contingencies.
We have a buyer’s agent that’s representing a buy. The agent presented the buyer advisory. The buyer went home and looked up the sex preditor’s list in their area. They submitted the inspection but they happen to be in an HOA that got documents out early (which isn’t always the case).
The buyers’ inspection notice was submitted leaving financing, but this was a cash deal. We signed the SPDS and our buyer waived the appraisal. Then they found out after the inspection period ended (because they submitted the BINSR) there was a sexual predator in their neighborhood and they wanted out. We were looking for ways to get out with the buyer, going through each of the contingencies.
That’s why this is a way to get your offer accepted. You need to get your client to eliminate as many of the contingencies as possible so that you give certainty to the seller that you’re going to close.
The strongest way to win is to offer your earnest money hard, at acceptance, for whatever your client can allow (even if just a portion). We don’t see many deals where they’re waiving the earnest money upfront. This shows certainty that you’re not going to cancel. Higher earnest money influences sellers. Most buyers don’t lose their earnest money because the contracts are written in favor of the buyer. There are so many ways to get out that it’s rare it gets lost.
It’s our job as quality agents, that the higher number influences sellers. If you have higher earnest money, it does make you look stronger, even if you have 4 or 5 contingencies.
Key #5: Educate the consumer pre-offer
The final key for getting your offers accepted in a low supply market is educating the consumer pre-offer. The first time you ever meet a client (at the very first meeting) is when you need to educate the buyer. This is understanding what the buyer is using for their sources of information, and whether those sources are credible or not.
This might be asking the buyer, “where do you get your information on the market”? You need to dig and find out how they got to the information. Buyers used to go the agent for education. Now they go to the internet (Zillow), news sources, a friend, or a neighbor.
It’s your job before you make an offer to sit down with the buyer about what’s going on. Don’t just tell them, show them with pictures and charts for a visual appeal. When they SEE it, it impacts them and changes their mind.