5 Elements of Winning Buyer Offers

 

The Colorado real estate market in 2021 is outperforming any expectations that we had leading into the year. And we are definitely still in an extreme seller’s market. Throughout the Front Range, housing supply is very limited and demand is still high with near record low interest rates, which makes for a highly competitive market for buyers. However, there are some tactics that can give buyers an edge against the competition.

 

Here are the top 5 elements that we have seen in winning offers this year.

1. Purchase Price

This may seem like a no-brainer, but when you have multiple people competing for the same property, the first thing that tends to happen is buyers offering more than the listed price of a property. While most buyers in this market use trial and error to find out just how much they need to go above the list price, it is best to set expectations that at the minimum, you should be willing to pay above the list price right now. How far above depends on the local market, and a good agent can give you a more exact idea of what to expect. In some places it might be 2% above the list price, others will be closer to 4%.

 

This is the new normal buyers are facing in the current market. Until we see a major shift in supply or a huge drop in demand, this will be the case at some level this year.

2. Appraisal Gap Coverage

Next to purchase price, this is the most important thing for buyers to address in their offers. Here’s why. When you get a loan to purchase a property, your lender will need to have an appraisal done by a third-party appraiser to establish the market value of the property. The lender will only lend you money based on the appraised value of a property. For example, if you have a contract to purchase a home at $400,000, and the appraiser only says that the home is worth $390,000, the bank will only lend you money towards a $390,000 purchase. That leaves a $10,000 gap between a contract price (what you said you would give the seller for their property) and the appraised value (what the bank says they will loan you to purchase said property). This causes problems and can make deals fall through.

 

The solution to this problem is to provide appraisal gap coverage in your offer. If you want your offer to be put on the bottom of the stack of 5-10 offers on a property, don’t mention anything about what you will do if/when the home doesn’t appraise. If you want your offer to be considered at the top of the list, be prepared to back up your purchase price with funds that you can bring to the table to cover that gap, in the event the property doesn’t appraise.

 

If you are fortunate enough to be a cash buyer, you just put yourself at the top of the offer list in competitive offers, as no appraisals are needed on cash offers.

3. Timelines

Traditionally, most loans take around 30-40 days from the time of contract to closing. In our current market, it seems that preference is given to loans that can close sooner if possible. This is where working with a local lender is huge as many big banks and online lenders don’t have that urgency to work at an accelerated pace. Your ability to close quickly, if needed, can be a difference-maker.

 

Just as important in being able to close quickly is your willingness to give the seller extra time in the home post-closing, if needed. There are many circumstances where a seller may need to find a replacement property, or they might have a small time gap between closing their home and moving into a new home. Did you know that you can offer up to 60 days rent-free (or with some rental amount) for a seller post-closing without having to sign a full on lease? If there is any indication that the sellers may need more time in the home (think tons of stuff to move, kids in the home, elderly), highly consider offering a post-occupancy agreement as part of the sale.

 

Finally, we’ve found that the ability to be proactive with timelines can be a standout factor in winning offers. If you can keep your important deadlines like inspections and appraisals as close to the beginning of the contract period, the more likely you are to get an offer accepted. Remember, the seller is going through lots of stress during this process as well and likes to know that they can get through those important dates sooner than later in the contract.

4. “As Is” Purchases

Here’s a secret not many people actually key in on. When you purchase a property in Colorado, the contract already states, that you are purchasing the property “As-Is”. No kidding – here is the actual language from the contract

“Except as otherwise provided in this contract, Seller is conveying the property to Buyer in an “As Is” condition “Where is” and “With All Faults” ”

— Section 10.2 – Colorado Contract to Buy and Sell Real Estate 

 

So what’s the big deal if you are already purchasing something in “As-Is” Condition per the contract? It’s because of 2 dates and deadlines that appear in the same contract: The Inspection Objection deadline, and the Inspection Resolution Deadline. There is one other important deadline in the contract that applies to the Inspection Period which is the Inspection Termination Deadline. When most people offer to purchase the property in “As-Is” condition, what they are really saying is that they are waiving their ability to objection to items that come up on an inspection (the Objection deadline) and they are not asking for any resolution to items that come up on an inspection (the Resolution deadline).

 

In that case, a savvy agent will remove those 2 deadlines from the contract, but will still keep the Inspection Termination deadline in the contract to protect the buyer’s interests – just in case the inspection is absolutely a nightmare. Keeping this deadline maintains the right for a buyer to conduct an inspection, as well as maintains their right to terminate based on the results of the inspection, but essentially makes it a GO/NO-GO decision following the inspection.

 

Keep in mind, not all homes are great candidates for this approach. Taking a bit more time during a showing to look at the major items that might cause concern on a property (roof condition, age of furnace/hot water heater, electrical panel, overall condition of the home) can save you stress down the line when you do finally get your inspection on an “as-is” offer. Remember, you are trying to see the forest through the trees, and getting under contract is just the start of the process!

5. Speed to Act

The market is moving very fast, with large percentages of the listing inventory going under contract in less than a week. You may have seen or heard about offer deadlines on properties this year. Many agents will set a deadline for all offers to be due but will also say something like this:

“In the event of multiple offers, all offers due on Monday at 5:00 PM with an acceptance of Tuesday at 10:00 AM. Seller reserves a right to accept an offer prior to that day and time”

— MLS listing 

 

Talk about a dissonant message! “So you have an offer deadline, but we still could just change that whenever we want if something good comes along”. However, this can be an advantage to you as a buyer if you can be quick to act. We’ve found that the ability to make a strong offer (see above described methods) soon after your showing shows some real intent in the process. You may actually be the one whose offer is “accepted prior to that date and time”.

 

If not, you can always resubmit an offer with even better terms and conditions that expires on their offer deadline. We’ve found that being first to offer can be beneficial, as you’ve shown real intent from the very start and have had more time to communicate your desire to secure the home over other offerings.


While these aren’t the only tools that can be used to win in this market, we’ve found that they are the most important factors for buyers to consider. It’s not easy out there, but with the right approach and the right agent, you can still find and buy your dream home! Search all the latest Front Range listings HERE.

Have a question or want to speak with a local expert? Feel free to reach out to clientcare@8z.com or 303.543.3083.