Top 5 Things You Can Do To Write A Competitive Offer When Buying A Home In St. Pete, Florida! (5 minute read)

April 23, 2021 by The727Team

Hey there,

If you’re reading this you may have become frustrated with the current real estate market as a potential homebuyer. I definitely get it – as an agent that represents 90% buyers, I understand it’s a frustrating time to find your forever home in this area. This article is for folks that are looking to buy a home with financing, specifically conventional financing. If you’re buying with cash then our recipe for winning will be much more simple. 

First of all, It has become increasingly more difficult to be competitive with FHA and VA financed offers so in this market I would recommend trying to get approved for a conventional loan instead. I did recently close a VA loan on a new construction house though so it can definitely work out if you’re open to working with a builder and wait for the home to be completed. 

This market has evolved significantly in the past year and I’ve had to adapt the way I write up offers to win contracts. I’ve been doing residential real estate since 2014 so I’ve learned some tricks of the trade being on both the buying and listing sides of the transaction. 

There are 5 main things you can do to really ramp up your chances to win a contract in a multiple offer situation. Some of these carry some risk and you’ll have to decide what your comfort level is when submitting a competitive offer. I’d love to represent you in your home search within St. Pete but if not you can send this post to your agent and I’ll probably at least get some good karma points. Alright I’m going to explain this all as concisely as possible, let’s get into it.

5. Appraisal 

Yoga in Northshore Park!

OK let me paint you a picture of the current real estate market in case you’re not already aware. 

Homes are going under contract within days of hitting the market, especially if they’re priced correctly. Sometimes they’re even overpriced but people are still willing to secure the contract and potentially pay the difference between contract price and appraised value if the house does appraise below the contract price.

When there’s multiple offers, a house usually goes over list price. This increases the risk of the contract price being above what an appraiser may see as fair market value.  If a listing agent is doing their job correctly they’re going to advise their sellers of the possibility of a low appraisal. So what can we do to mitigate the seller’s concerns?

Well we can write in a clause that says something like “Buyer is willing to pay up to $10,000 over appraised value in the event of a low appraisal below contract price.” 

When there’s 5-10 offers on the table though even that might not be enough. The strongest way you could word this is “Buyer is willing to pay the difference between contract price and appraised value in the event of a low appraisal”. If the listing agent is doing their job correctly then they will ask us to verify that we have the funds to make up the difference. 

The risk here is you may potentially have to pull extra money out of your pocket to close, however if it appraises at value then you’re good to go. 

4. Escalation clause

Volleyball at Northshore park

An escalation clause is simply an extra document we can tack onto your offer saying that you’re willing to increase your offer a certain amount above the highest offer, up to a certain amount. 

Let’s use a hypothetical. Let’s say our offer is $399,000 and we added an escalation clause saying that you as the buyer will pay up to $410,000 in increments of $5,000 above the highest offer. Let’s say there’s another offer for $405,000 then BAM our offer gets upped to $410,000 automatically. The listing agent has to send me the other offer to prove that there is in fact an offer that we have to beat so they can’t just jack up the contract price without proof. This sometimes works but when there’s multiple agents putting in escalation clauses you typically need to add some other verbiage to stand out. 

3. Inspection contingency

The Vinoy Condo buildings in Downtown St. Pete

I would never recommend waiving an inspection period 100% but we could put a clause in there saying that you as a buyer are responsible for absolutely all repairs. This would include any 4 point inspection items which are the items that need to be taken care of for the home to be insurable. 4 point is Roof, HVAC, Electric and Plumbing. 

The home has to be insurable at closing to get insurance, and you need insurance to get financing. I’ve had transactions before where the seller refused to fix anything so we had to get a high risk insurance policy, get the items fixed right after closing and then get switched back to a normal insurance policy after that. 

It’s kind of a pain but you’d basically be paying for an expensive insurance policy for one month while you took care of any potential repairs.

This option sounds somewhat risky but a lot of sellers would love to hear that the buyer is not going to negotiate them down on price after an inspection. The silver lining here is that we would still write in an inspection period so you could potentially back out if there is a major repair that you’re not willing to take on yourself. Usually a 10 day inspection period is standard. This is when we get an inspector in there,  can back out for any reason and still get your escrow money back. 

2. Personal Letter

Street Mural In The Grand Central District

I think in most cases the seller will pick the offer that is going to net them the most money or be the least amount of hassle but a personal letter could be a great tie breaker if your offer is similar to another one. 

I’ve heard there’s actually talks of making this illegal because a seller could potentially discriminate somehow if they know about their buyers. I get how that’s important however I know when I’ve represented sellers a lot of them like to know who their home is going to. 

Here’s a few tips on how to write a personal letter. Keep it concise – maybe just a paragraph or two. Something the seller can read to get an idea of who you are but not tell your life story. Add a picture of you and your family if you’d like or if you’re kinda ugly like me then just send pictures of your pets! It’s nice to tell the seller a bit about what you like about the house, a bit about why you love the house and your reason for putting in an offer, a little bit about your background so the seller knows you’re a real human. 

1. Hire a motivated, knowledgeable and likeable agent

I’m in this picture somewhere. Kind of like Where’s Waldo but this time Where’s Chris??? This is a courtyard in Gulfport

It’s common sense to hire someone that is competent at their job, especially dealing with the biggest transaction of your life. In this market it’s also important to find an agent who has time to make you a priority. If you see a hot property come on the market you typically need to be out there within 24 hours to get your offer in. My lifestyle is a bit different then other agents since I’m a single man with cats so my schedule is 100% up to me which allows me to put time into my job in this crazy market. 

A lot of my business is actually people who buy homes remotely. Many people are considering moving here and aren’t able to physically make it out to the property if they live outside of the area. Luckily we have the technology to make these situations a little easier – Facetime / Video calls for showings can be a perfect asset to your home search. If you’re not familiar with the area, I can be your boots on the ground and give you insight into the neighborhood whether it be from my experience or a blog post I’ve written about the area.  

One other thing to consider – If your agent is submitting sloppy paperwork and is newer to the business then you may be at a disadvantage. Truth is listing agents will take you more seriously if you can demonstrate that you know what you’re doing as to not make their job more frustrating or difficult. I’ve been doing this over 7 years now and I’m always learning new things but I have my paperwork skills on point!

In Conclusion

boat

Shell Key! Great place to go boating

No one wants to be house poor or go beyond their means when making an offer. Let’s put together an offer that you’re comfortable with that doesn’t extend you beyond your means. I used to be mostly focused on getting my clients the best deal however times are changing and we now have to focus on being a bit more aggressive to secure the home you as a buyer really want. 

With that said – if you have the means and are set on buying the home of your dreams then let’s make it happen. If you have to pay a little extra for the home that would make you happy then it’s worth it in my opinion. The difference of $10,000 on a mortgage, assuming a 3% interest rate is about $42 per month. Maybe trade off a couple meals at home instead of dining out every month and win that contract so you can own a home you’re proud of. Speaking of being happy, even if you have to make some sacrifices and don’t get into your perfect house right now I can almost guarantee that you’ll be happy living here. If you’re not happy living in the St. Pete area I don’t think you could be happy anywhere honestly.

Well thank you so much for reading. Feel free to reach out to me via phone or text , text is preferred because I get an insane amount of spam calls and may ignore your call by accident. You can also email me here and I’ll be sure to get back to you ASAP. Have a great day!!!!!!!