How to Write a Winning Offer on Your Dream Home

It’s a tricky time to be buying a home.

In January of this year, there were roughly 14 percent fewer homes for sale compared with a year ago, the largest year-over-year decline in 28 consecutive months of falling supply, according to a Redfin report. Combine that level of low inventory with increasing prices and rising interest rates, and the 2018 housing market is shaping up to be a competitive one.

To combat the odds that are stacked against you, get on top of your game so you know how to write a winning offer to get you the home of your dreams.

Here’s what to do:

1. OFFER THE RIGHT AMOUNT

   We’re not in 2008 anymore. A lowball offer to start a negotiation is a great way to ensure that you’ll be going to more open houses.

   A real estate agent can help you figure out the right price by pulling recent sales of similar homes in the area. In today’s market there’s a good chance that you’ll have to offer asking price, or even slightly more if you really want the property.

2. GET PRE-APPROVED

   To make a competitive offer, you’ll want to include a pre-approval letter from a mortgage lender — a written commitment that says you are likely to qualify for a certain loan amount based on a preliminary review of your credit, income, and debts. The letter will give a home seller greater assurance that you’ll get approved for a loan after you sign a purchase agreement.

   Write a personal letter to the seller — but keep it concise.

3. LIMIT YOUR CONTINGENCIES

   These are things like passing a home inspection or waiting until your home sells first. Generally, real estate agents recommend buyers include a home inspection contingency, since it mitigates their risk by enabling them to check for physical defects in a home. But submitting an offer with a lot of additional contingencies can make your bid less attractive. Consider waiving less-important ones, like a radon or termite inspection, since these issues are relatively cheap to remediate.

4. WRITE A PERSONAL LETTER TO THE SELLER

   One way to make your offer stand out is to tug on the seller’s heartstrings with a cover letter. (One Redfin survey found that 43 percent of winning offers use cover letters.) Your letter should explain why you're passionate about buying the home (“I’d be so happy cooking Neapolitan pizza for friends and neighbors in your outdoor wood-fired oven”) and why you’d be easy to work with (“I’ve already been pre-approved”). Also, keep it concise — no longer than a page.

   One caution: The exchange of certain personal information can be a violation of fair housing laws, so have your agent proof the letter to make sure it doesn’t raise any potential discrimination issues.