This provides assurance to the seller that if the home does not appraise for the agreed upon price you will cover the entire short fall or part of it.  Buyers often confuse this with having to pay more for the home. This is not true.   If there is a short appraisal and you make up the difference you are still paying the same price you initially agreed to but bringing more cash to cover the gap in appraised value and purchase price.  Think of it as putting more money down.  In order to use this strategy you’ll need to be able to show you have the added funds to make the difference you promise you can cover.  

Sometimes you can beat a cash deal with this tactic.  Sellers love cash but if your offer is higher they like that too and along with gap assurance can make you as attractive as cash.  The nice thing about this strategy is if the home appraises ok  you'v e got no gap to cover but it may have been the thing that got your offer picked!  There is a specific addendum for this but in a nutshell it would read like this: If the property does not appraise for the final contract price the buyer will contribute up to XXXX in cash to cover the shortage. 

In order to entice a seller you can offer to do something less than have unlimited inspections.  Maybe after looking through the home you feel the roof is the only thing you want more information on.  Perhaps a termite and HVAC inspection is all you need.  The seller looks favorably on this as they view it as fewer potential problems to work through. 

Sellers love this but know you’ll end up inheriting some issues.  Every home has them.  The newer the home is the less likely you’ll have issues.  An old home with worn out HVAC, roof, pluming issues means you’ll definitely want to budget for replacements if you skip inspections.  

Use this to let the seller know you won’t be asking them for the small stuff.  You can offer to absorb the first 1000.00 of any single repair item.  Let’s say there is a radon repair for 950.00 and a HVAC repair for 2500.00.  In this case you would accept the radon cost because it is under 1000.00 and you would ask the seller for 1500.00 on the HVAC since you are absorbing the first 1000.00 of that repair. 

Use this to out bid your competition auction style.  You’ll offer a starting price and beat the next highest offer by a certain amount up to a cap which is they max you’d be willing to pay for the property.   With this strategy you don’t have to go all in unless another offer ‘escalates’ yours up.  It is very effective.  If you win they have to show you the other offer that caused yours to go up.  It would look something like this: 

In the event of a higher competing offer prior to the contract acceptance date the buyer agrees to increase their offer to the amount of the highest net offer plus $1000.00 with a total net price not to exceed XXX,XXX on the condition that the seller provides the buyer with a copy of the signed offer from the other party. 

In this market it goes without saying you won’t want to ask the seller to pay any of your closing costs but you can offer to pay towards theirs.  This reduces their fees allowing your offer to net them more money.  This is also a good alternative since it does not bump the price as high and risk appraisal issues.  

The old saying, ‘Cash is King!’ is never more true than when it comes to buying real estate.  About 22% of offers today are cash.  Sellers love this one because there is no appraisal (unless they specify it upfront), it can close quickly and there’s no risk of financing failing.  Some buyers are moving their assets around so they can offer cash because it’s the most effective way to buy. 

Next to cash, conventional financing is what sellers prefer.  They can close relatively quickly and typically have less appraisal issues.  Many buyers that start out with FHA or VA loans have learned to convert over to a conventional to help their chances of getting a deal together. 

If the home has been on the market a while and there are not other offers then you won’t need to use these strategies.  If there are multiple offers it often takes several of these strategies together to make you the clear winner.   

As I mentioned at the top of this page the highest offer does not always win.  The seller is looking at all terms of the contract to pick the one that makes life the easiest on them and nets the most money.  Timing of the seller giving possession after closing can be very important to them, especially if they have timing issues on their end.  If the seller needs extra time after closing to turn over the keys you may be able to gain an advantage here over the offer that needs them out at closing.  Find out what they need and give it to them if you can.  Maybe they need 3 extra weeks after closing to stay in the house.  Instead of charging them rent, maybe you let them stay for free if they pick your offer.   I have an addendum for this to minimize complications.  Basically, the seller becomes a short term tenant and the buyer becomes a short term landlord.   

If you want the seller to know you are serious about buying their home and you absolutely intend to close or you will compensate them,  you can offer Hard Earnest money also known as a non-refundable earnest deposit.  This means if you don’t close for ANY reason (other than a seller related issue) the seller is entitled to the earnest.  This gives the seller confidence in you and your offer and may make the difference in winning the bid.