With the current Philadelphia real estate market shifting to favorable conditions for sellers, submitting a strong purchase offer letter is a requirement for buyers. House hunters may prefer to submit a verbal offer before going through the work of writing up a formal offer, but when bidding on a sought-after property, one priced appropriately in the market, you will need to provide something in writing. Philadelphia-area real estate agents use a standard form, known as the agreement of sale, which is approved by the Pennsylvania Association of Realtors. When you sit down with your real estate agent to complete the purchase offer letter, here are some ways to differentiate your bid:
- Offer the price that you truly want to pay. When competing against multiple offers, you may not get another chance to raise your initial offer. You may even want to consider bidding over the asking price.
- Set up financing before you submit an offer. Unless you’re offering an all-cash deal, include a mortgage pre-approval letter. Larger deposits specified in the agreement of sale show sellers you are highly committed, so have a down payment saved and easily accessible. Then, when you find the right home you can act quickly and submit a strong offer.
- Be flexible about settlement dates. Offer a quick settlement, but also allow for flexibility in case the seller needs the extra time. Most sellers have spent months preparing their house for sale and are ready to move on. A longer time to settlement could signal that the buyer isn’t fully committed to the purchase. Sellers also worry about unforeseen situations causing the deal to fall apart in the time between the initial offer and settlement. In your written purchase offer letter, offer a range of settlement dates, but specify the earliest date you will be able to execute the deal.
- Limit contingencies. Contingencies are circumstances that may arise and allow you to cancel the deal. Mortgage contingencies specify that if the buyer is unable to obtain a loan he have the option to cancel the purchase. Sales contingencies state that if the buyer is unable to sell a current home within a set timeframe, the seller is free to entertain other offers. Purchase offer letters without these contingencies may work in the favor of first-time buyers without a current home to sell. However, inspection contingencies are important for all buyers. Even if you are purchasing the home “as-is,” home inspections, radon inspections, and termite inspections are important ways to calculate your future repair and renovations costs.
A purchase offer letter is your key communication with the seller. Skillful real estate agents use this document to analyze a buyer’s level of commitment as well as his ability to pay, so take the time to fill in the details and make it an accurate reflection of everything you bring to the table.