Should You Write a “Love Letter” to a Home Seller?
Dan S | Apr 26, 2022
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By Kelly K. on Feb 4, 2022
As a prospective homebuyer, enduring an endless cycle of finding your ideal home, making an offer and then getting outbid by another buyer can be mentally and emotionally draining. All just to cross your fingers and stomach the process over and over again. Lather, rinse, repeat.
But don’t panic. If you’re wondering how to compete with your fellow Denver buyers, we’ve got the inside scoop on why sellers may be rejecting your offer (it may not be what you think!) and the key to crafting a winning offer on a house.
There are a handful of reasons why your house offers continue to be rejected. The key to turning the tides in your favor? Having a better understanding of what a seller considers an attractive offer, and drafting up a bid that appeals to those needs.
For instance, maybe they’re looking for an offer with fewer contingencies or a speedier transaction. Or, maybe feeling confident that the deal will close is at the top of their priority list. Whatever the case may be, there are strategies homebuyers can put into play that’ll improve their chances of making a winning offer on a house.
We know what you’re thinking: you’re losing out on houses because you’re getting outbid.
We’re going to let you in on a little-known secret…
In a multi-offer situation, the highest bid doesn’t necessarily guarantee a win. Prevailing in a sea of other buyers all boils down to appealing to the seller.
As a Denver homebuyer, having a trusted real estate agent on your side will help you create a strategy that strikes a balance between your goals and the seller’s goals.
Think of all the valuable intel you can tap into by working with an agent — from what’s happening in the local Denver market to property values in the neighborhood to crafting a stand-out offer. Plus, they’re expert negotiators. And, let’s be honest, who wouldn’t want to get the best deal possible?
Taking your time to interview and choose the right real estate agent can make or break your house-hunting experience, especially in a hot market like Denver.
1. Consider a higher earnest money deposit
Often called a "good faith" deposit, earnest money shows a seller that you’re serious about purchasing the home. The more earnest money you’re willing to put down, the more enticing your offer will be. While the money isn’t typically handed off to the seller until after they’ve accepted your offer, you can communicate your intent to make a higher earnest money deposit when submitting your offer.
On average, buyers put down about 1%–3% of the home’s purchase price as a good faith deposit, depending on market demand and the terms outlined in the purchase agreement. In a competitive situation, your real estate agent will be your go-to resource when determining what earnest money amount will make your offer competitive.
2. Consider waiving certain contingencies
A real estate contingency, also referred to as a "walkaway clause", is a stipulation included in an offer that requires certain conditions to be met in order for the sale to close.
For example, some buyers may choose to include a home sale contingency, which means their offer is contingent on selling their existing home first.
For sellers, contingencies like the home sale contingency pose a serious risk. For one, it can delay the purchase process and prolong the closing timeline. It also introduces uncertainty to the equation, as the entire deal could fall through and the buyer can walk away from the deal with no significant risk.
The same nerve-racking dilemma applies to the financing contingency, which states the home sale ultimately depends on the buyer’s ability to secure financing. If a traditional mortgage lender pulls the rug from under you and denies your loan application, the deal is null and void. In fact, even the risk of a loan officer being slow and ineffective can be a major deal breaker for a seller who wants to prioritize a fast and efficient closing.
That doesn’t quite translate to the confidence and certainty sellers are looking for. Instead, it means sellers are forced to start the process from scratch — relisting their home, assuming unexpected expenses and searching for a new buyer all over again. Ouch.
Sellers (and buyers for that matter) don’t want to sit idly by, anxiously biting their nails while they wait for contingencies to clear … especially if there are other options!
3. Consider making an all-cash offer
Make a cash offer? You’re joking, right? The average homebuyer doesn’t have that kind of money lying around. But, the reality is, if you've lost several bids already, you've probably been up against cash buyers. The fact of today's market is this: all-cash offers are the way to win.
But here's the thing: you don’t have to have half a million dollars or more stashed away to compete against an all- cash offer with your own cash offer.
The secret to making all-cash offers in Denver is working with iLender Accept.inc. We help everyday people who qualify for a mortgage secure the upfront liquidity needed to bid with the power of cash in their back pocket.
Let’s face it: when a seller is choosing between an all-cash offer and one made using a traditional mortgage lender (read: with a risky financing contingency), which do you think they’ll pick? The certainty of cash, which can close in about 2 weeks? Or, the slower, riskier option?
Not only are cash offers 4X more likely to win over an offer with a traditional mortgage, but buying a house with cash puts more negotiating power in your hands. So, just how much negotiating power are we talking about? On average, Accept.inc buyers enjoy a discount of $11,545 off the highest offer in a bidding war. And that’s just the average. Some buyers secure dramatically larger discounts off the highest bidder. One Accept.inc buyer won a home by submitting a cash offer that was $98,000 less than the highest competing financed offer. Now, that’s the power of cash!
Let that sink in for a moment…
That means those who got Cash Approved™ submitted a winning offer on a house that was roughly twelve thousand dollars less than the highest bidder. What’s more, homebuyers facing little competition on a property (a.k.a 2 offers or less) pay approximately $15,979 below the home’s listing price. That's the hidden discount of a cash offer.
All-cash offers give homebuyers the competitive edge needed to score the winning offer on a house, while also providing money-saving benefits. Whether it’s in the form of a lower down payment, a lower sale price, or more immediate equity, cash is the secret ingredient to breaking the cycle of rejected offers.
And the icing on the cake? After you’ve officially closed on your new Denver home, you can pay back the loan over time – just as you would through a traditional mortgage lender. There is no added cost to turn your offer into cash with Accept.inc and there are no hidden fees. No itty-bitty fine print you need a magnifying glass to read. It’s simply a new (and long overdue) approach to mortgage lending – one that gives everyday people the certainty, speed and competitive advantage that comes with shopping the housing market with cash.
Make the winning offer on a Denver home
Forget the days where being a cash buyer meant you’re an A-lister, an investor who flips properties, or a corporate developer. Now anyone who qualifies for a mortgage can become a cash buyer when they have Accept.inc on their side.
Continuously getting outbid and losing out on houses is stressful and disheartening. We want to ensure our Denver community continues to thrive and the everyday homebuyer has the opportunity to create lasting memories in their dream home. So, the moral of the story? Crafting a winning house offer isn’t about making the highest offer, it’s about making the best offer.
Ready to say farewell to losing offers and increase your chances of making a winning offer by 4X? Get Cash Approved today!
Dan S | Apr 26, 2022
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