Love Me, Love Me Not, Love Me

Ever wonder if your bid is going to be enough to win the house of your dreams?  If so, there’s a little secret about the bidding process that all homebuyers should—but don’t always—know; it’s not all about the money.  When the real estate market is strong and houses are in short supply, the seller of a desirable property usually has an array of offers to consider. Interestingly, however, it’s not always the highest price that wins the sale. That’s because the seller weighs myriad qualitative and quantitative factors before making a decision, and price is just one of them. Other key considerations include:
 
  1. Is the offer all cash or is there a mortgage contingency?
  2. How much of a down payment is the potential buyer contributing?
  3. What type of loan is the buyer considering?
  4. How much financial liquidity will the potential borrower have after paying for closing costs?
  5. Are there other contingencies in the offer; e.g. any furniture or fixtures?
  6. If applicable, what are the chances that the board will approve the prospective buyer?

However, it’s not just about money, paperwork and board reviews. It can be difficult and challenging to let go of a house, and putting a home on the market can introduce unexpected emotional factors as well as ones rooted in business. For some, selling a property can be as difficult as letting go of a cherished childhood toy or a favorite pair of jeans. Having a long history with a property and the memories created in a home can very easily create separation anxiety for sellers. There’s no way to take emotions out of the equation, but there are ways to make the transition easier. For example, sellers often bond with prospective buyers that they believe will value and care for their home as much as they did.
This is where writing a “love letter” can tip the odds in your favor when the bidding competition is high. It can even be the deciding factor when a seller has considered everything else on the table. A love letter is simply a professional letter that describes in your own words and enthusiastic personality the reason why you were drawn to the property and why you would be the perfect new owner.
Since persuading the seller to accept your offer is your primary motivator in writing a love letter, be sure to include the following important elements:

  1. Make a Connection: Homeowners prefer buyers they can relate to and have a personal connection with. What do you have in common with the seller? Did the seller raise their children in the home and you plan to do the same? Do you both have pets?
  2. Properties Best Traits: Describe what you like about the property and location. What is it that drew you to the home: a fireplace, a terrace, the kitchen, a closet?
  3. Personalize Yourself: Describe yourself and how you got to the point of making an offer. This will help the seller visualize who you are and imagine you living in the home. It’s also another opportunity to make a personal connection. What do you do, where do you come from, what are some of your hobbies, how long have you been looking for a new home?
  4. Financials: Emphasize your creditworthiness and keep the five Cs of credit in mind: 1. Character: Your reputation; 2. Capacity: Your ability to repay the loan; 3. Capital: The amount of money you plan to put into the investment; 4. Collateral: The assets you have to secure the loan; 5. Condition: The loan characteristics, such as interest rate, and the amount of principal influencing your desirability to a lender and board.

It’s a very competitive market, and I continually hear from many exhausted buyers who have come up short in multiple offer situations. In many cases, the missing ingredient is the love letter. So if you find yourself in a competitive bidding situation and want to make a more meaningful connection with the seller, take a few minutes and include one in your next offer and let me know how it goes!