Tag Archives: Tricks of the Trade

Tricks of the Trade ~ Use an Escalation Clause to Outbid Competition

 

Getting Your Offer Accepted! – Write an Offer with an Escalation Clause in the Case of Multiple Offers (Part 11 in a Series)

 

 

How to win when everyone wants the same one!

How to win when everyone wants the same one!

Have you found the home you want to buy and are now writing an offer? Did you just learn there are other parties writing an offer on your home too?

Welcome to a Seller’s Market!

Denver real estate is currently experiencing a shortage of inventory but an abundance of buyers looking to take advantage of the low interest rates. This situation doesn’t seem to be easing up especially in the price ranges less than $350,000. The lower in price the house it the more competition there is.

If you are serious about winning the bid there are some things you can do to assure the seller likes and accepts your bid above all others.

Now is not the time to play “Let’s Make a Deal!” Now is the time to show the seller your good intent by offering a price on the home that exceeds the list price and includes and escalation clause.

 What is an Escalation Clause?

Escalation Clauses are used in the case of competing offers. When there are more that one offer on a property an offer with an escalation clause will kick in. Typically such a clause will indicate the buyer is willing to pay $X more than the highest offer increments of $2000.00, up to a value of $X

So in simple terms say the house is listed for $300,000. There is a competing offer for $315,000. The escalation clause would make your offer $317,000.

How do you know there actually is a competing offer?

Good question, it’s hard to trust when money in involved so within the escalation clause there is a stipulation that the listing agent must show the competing offer along with the lender letter indicating that the other buyer exists and can actually purchase the property.

 Do Escalation Clauses Work?

In theory they do work, but as I’ve been discussing though out this series, sellers have different goals. Sometimes price is only one part of those goals. If your offer isn’t up to the seller’s standards in terms, personal property, conditions, and/or closing date then the escalation clause may not work.

You can also get out bid. The competing offer might have offered more.

Escalation Terms

There are no set rules for how large an increment you need to set or how high you should go. Knowing what the other offer is would be helpful, but that knowledge isn’t something we are privy too. Some homes are bid up tens of thousands of dollars and others only a few thousand. It really depends on the value of the home and the potential future value. If you don’t feel comfortable bidding the home up, then don’t.

Escalation clauses are meant to help secure the home in a rising market. It is another tool to accomplish a goal.

Begin your home search online right here!

If you are just starting the home buying process and are in need of an experienced buyer broker, pick up the phone and give me a call.  I work hard to make sure my clients are the ONE WINNER! Call direct 720-279-4599

 

 

 

About Kristal Kraft, Denver Realtor

Hi, I'm Kristal Kraft, the resident blogger here, posting real estate and Metro Denver area information since 2003! You will find me writing about things I feel are important in the home buying process. When it comes to buying and selling homes, there's so much to know. I enjoy providing that information to my clients so they can make decisions based on knowledge and actual fact. You'll find I'm more of a teacher than a salesperson. My services include: residential property sales, purchases, 1031 Exchanges, new home purchases, REO, foreclosures, short sales. So if you are in the market to buy or sell Denver real estate, tap into my knowledge, just call me. I welcome your call!

Tricks of the Trade ~ CTM Digital Contracts are a Professional Plus

Getting Your Offer Accepted ~ Be sure your offer is professionally written using CTM digital software (Part 10 in a Series)

There will be only One Winner, let it be YOU!

There will be only One Winner, let it be YOU!

The Objective is To Look Good in the Crowd of Offers!

When a seller receives only one offer on his/her house, usually that offer is the one they work with assuming it has acceptable terms. In a seller’s market where it is not unusual to receive multiple offers the importance of having a well written offer that is presented in a professional manner becomes critical.

Let me illustrate this by telling a story. Recently I had a listing that was very appealing in price and location. I received 17 offers on it within 48 hours.This is not normal but due to the price of the property many buyers wanted it.

The first offer was for less than 1/2 the listing value. These offers come in without the buyer even looking at the property. The following offers were more realistic with a variety of terms.

Messy Offer is Not a Good Reflection on You

One offer was scanned and emailed to me so it arrived in a pdf that I had to read sideways. Frankly, it was too much trouble for me to insert it into a reader to look at in a normal reading manner. I was able to tilt my head to read it and determine the terms, which I was recording on a spreadsheet.

I thought at the time how unprofessional the offer was. It was hand written and half the blanks in the contract were not filled in. If we were to accept this offer I would have had to counter the offer filling in the necessary terms so we could proceed.

Needless to say this offer was not a serious contender.

Free Works but You Might Get What You Pay For…

Several of the other offers were written on the FREE digital contracts that are offered by our licensing agency. Nothing wrong with this, but this system is not commonly used because it is not seamlessly coordinated with both sides. It basically lets the buyer sign the doc online then the offer gets emailed to the listing agent, who then needs to use another program to let the seller’s sign digitally. It is a cheap way to write offers with no regard to integrating the entire contract and all the other forms.

The rest were written on the CTM digital software officially sponsored by the Colorado Association of Realtors.

What this means is because I use the state officially sanctioned software, our transaction would move smoothly between all the parties working on the contract, including the buyers, seller, lender and title company. All parties can log into the dashboard where the contract and addendum’s are stored and be able clearly read the documents. Being able to read the docs seems like something that should be expected, but it wasn’t so long ago that we used fax machines. After a contract is faxed a time or two, clear reading was difficult at best.

It’s because of this fact that the real estate industry has embraced digital contracts. Yes, it’s easy to sign digitally saving everyone time, gas, paper and ink, but most importantly we leave a paper trail we cal all actually read!

Some agents in our industry have yet to embrace technology. I don’t understand professionals who refuse to do so. Perhaps they don’t do enough business to warrant paying the small fee for digital contracts, if this is the case I question their dedication to the business.

When there is a strong chance that your offer will be competing with others it becomes even more important to look good, really good. Using the most widely accepted contract software will be a plus.

 Anxious to Find a Home? Begin Your Denver Home Search Here!

If you are interested in finding a new home now or in the near future, please call me for a consultation. I welcome your call!

Call direct 720-279-4599

About Kristal Kraft, Denver Realtor

Hi, I'm Kristal Kraft, the resident blogger here, posting real estate and Metro Denver area information since 2003! You will find me writing about things I feel are important in the home buying process. When it comes to buying and selling homes, there's so much to know. I enjoy providing that information to my clients so they can make decisions based on knowledge and actual fact. You'll find I'm more of a teacher than a salesperson. My services include: residential property sales, purchases, 1031 Exchanges, new home purchases, REO, foreclosures, short sales. So if you are in the market to buy or sell Denver real estate, tap into my knowledge, just call me. I welcome your call!

Tricks of the Trade ~ Write an Offer without Asking for Personal Property

Getting Your Offer Accepted! – Write an Offer Without asking for Additional Personal Property (Part 6 in a Series)

 

7217293_s For many months now we have been telling our buyers about the shortage in inventory in price points below $300,000. The lower the price point, the hotter the competition. Home buyers in these price points are finding they aren’t the only ones interested in the same home.

When this occurs the buyer with the best contract for the seller usually becomes the Winning One.

This series of Getting Your Offer Accepted is written in hopes of helping buyers prepare a strategy using these Tricks of the Trade. Home sellers look at many factors in the offer, the price is only one consideration.

If you had to boil down the contents of an offer based on the things buyers and sellers “fight over.” Those things would be:

Personal property if included is offered in the MLS listing. Personal property are those things that can be picked up and carried out of the house, washer, dryer, window coverings, refrigerators, range/oven. Sometimes personal property can be a fancy antique Crystal Chandelier that has been handed down over the generations from Grandma. While it may look wonderful in the home, there is absolutely no way the seller is going to leave that behind! Fighting over something with sentimental value like that is pointless. The buyer will lose.

Instead of picking fights you are going to lose, focus on the points that really matter. Do you want to buy a home or spend weeks, months looking and losing houses?

Don’t ask for things that aren’t included, if you do and the other offer doesn’t, you will lose.

Pick Your Fight, The Winning One Gets to Move In!

Your fight is really in outbidding the competition. You want to look good in the seller’s eyes, so you win the bid.

If you are a buyer or seller in the Metro Denver market who is getting ready to move, put my experience to work for you. I welcome your call.

Begin your Denver Homes Search online right now.

Call direct 720-279-4599

 

 

About Kristal Kraft, Denver Realtor

Hi, I'm Kristal Kraft, the resident blogger here, posting real estate and Metro Denver area information since 2003! You will find me writing about things I feel are important in the home buying process. When it comes to buying and selling homes, there's so much to know. I enjoy providing that information to my clients so they can make decisions based on knowledge and actual fact. You'll find I'm more of a teacher than a salesperson. My services include: residential property sales, purchases, 1031 Exchanges, new home purchases, REO, foreclosures, short sales. So if you are in the market to buy or sell Denver real estate, tap into my knowledge, just call me. I welcome your call!

Tricks of the Trade ~ Write an Offer with the best Price

Getting Your Offer Accepted ~ No Concessions to the seller – Write an Offer with the Best Price (Part 5 in a Series)

 

This series is emphasizing the methods used to get your real estate offer accepted in a strong seller’s market. Currently the Denver Real Estate market has a shortage of inventory and an excess of buyers wanting to take advantage of this low interest rates. Often buyers are finding they aren’t the only one interested in purchasing a property and have to bid against other buyers to be the Winning One.

The best price may be the main issue, but really the seller looks at their “bottom line.” What a seller nets after all is said and done is actually more important than the price.

The Bottom Line is the Final Amount the Seller Receives

Stop and Think when preparing an offer that is competing with other offers!

Stop and Think when preparing an offer that is competing with other offers!

To give you an example, a seller can get an offer that is $5000 over his price, but there might be a clause in the contract that requires the seller to pay the buyer’s closing costs of $10,000. The net to the seller would actually be $5000 LESS than full price.

Concessions paid by the seller are not unusual to see written into a contract, but when the real estate market is tight, with a shortage of inventory and an excess of buyers, asking for a concession is going to be detrimental to you being the One Winner of getting that house.

If you absolutely have to have the concession, write it in but be sure you make the seller get at least his asking price or more (assuming the house will appraise for that value).

Type of Loans Can Effect the Seller’s Bottom Line

Another thing to think about is the closing date.  If a seller has an FHA loan, those mortgage payments are not prorated for the closing date. They are prorated by the month. This means if you close at the beginning of the month the seller will be making a house payment for that month, but not living in the house!  If you move that closing date to the end of the month, the seller can SAVE an entire month’s mortgage payment.  This action doesn’t cost the buyer a dime!  Obviously it’s a strong plus for you to consider when preparing your offer.

Buyer Concessions have been very popular in a Buyer’s Market they work, because the Seller is in a position to have to play or not sell their house. Now we are in a Seller’s Market and the ball is in the Seller’s court! Buyers need to play by the Seller’s Rules!

Preparing a contract to be the Winning One can be a combination of many things, there is no one formula that fits all sizes. Knowing what the seller needs and what the buyer can give is helpful in creating a strategy.

Hiring an Experienced Buyer’s Agent Can Help You Bid Be the Winning One!

If you are a home buyer in the Metro Denver Real Estate market and ready to begin your search now or in the near future, give me a call. I can assist you in being the One winner!

 

Begin your Denver home search online here

Call direct 720-279-4599

About Kristal Kraft, Denver Realtor

Hi, I'm Kristal Kraft, the resident blogger here, posting real estate and Metro Denver area information since 2003! You will find me writing about things I feel are important in the home buying process. When it comes to buying and selling homes, there's so much to know. I enjoy providing that information to my clients so they can make decisions based on knowledge and actual fact. You'll find I'm more of a teacher than a salesperson. My services include: residential property sales, purchases, 1031 Exchanges, new home purchases, REO, foreclosures, short sales. So if you are in the market to buy or sell Denver real estate, tap into my knowledge, just call me. I welcome your call!