In locales all over California, housing supply is tight. The homes that are on the market are usually snapped up quickly, often to cash buyers.
Home buyers who want their offer to stand out can often send a letter to the seller and, when done properly, letters can help close the deal. Let’s look at a true story of selling and buying a home in a hot market.
Mrs. Magilicutty lists a lovely 3-bedroom, 2,500-square-foot home on a beautiful lot. In just 24 hours, she has four showings and four offers.
In this hot market, everyone is nervous. Potential buyers want this great house. Mrs. Magilicutty wants a solid, but quick sale on her house. In fact, Mrs. Magilicutty has an all-cash offer which will be quick and clean and will help her purchase her next house which is currently in escrow. Time is pressing and Mrs. Magilicutty wants nothing to go wrong with her home sale.
Both she and her real estate agent analyze the offers. The highest two offers are FHA loans. The lowest offer is a conventional mortgage with 50 percent down, but the offer is 10,000 under the asking price.
The top two offers look good, but since FHA financing requires such a small down payment, the buyers might not actually be in a position to obtain loan approval. Mrs. Magilicutty is worried that these buyers have very little cash and the deal will fall through if anything unexpected shows up in the FHA approval process. Or if there is a problem with the home inspection, a buyer with no cash might drop the deal.
Mrs. Magilicutty focuses on the last two offers, both conventional buyers. She makes up her mind to deal with the lowest bidder after her real estate agent reads a letter from the potential buyers. The buyers are downsizing now that the kids are gone and they are selling their 8,000-square-foot home. Some of the proceeds from their home sale will help their daughter in college. Some will help buy the new house. They are excited about the property. They want this deal and they want to move forward.
Two things Mrs. Magilicutty is now sure about: The buyers can afford the house and the deal likely won’t go sour.
The power of a letter to the seller is often reassurance. The letter can demonstrate to the seller that the buyer is serious about the property and can make the deal. Sometimes a letter can show understanding of a seller’s sentimental attachment to a house.
In the case of Mrs. Magilicutty, after some negotiations, the buyers came in just $10,000 under the highest bid, but it was the letter that tipped the scales.
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