A little sincerity goes a long way today
Agents are increasingly pushing their buyers to submit more than a purchase agreement when making an offer to buy a home, reports a recent article by the New York Times.
Personal letters and even baked goods can win-over a hesitant seller, giving the buyer just enough of a competitive edge to garner the seller’s acceptance when multiple offers have been submitted. It seems that cash is nice, but love letters sweeten the deal.
While most brokers report sellers typically give preference to the highest bidders and offers with the fewest contingencies, a personal letter’s influence effectively focuses the seller’s attention and tips a letter writer’s equal or lesser balance in favor of their position. Given multiple buyers with similar financial resources and purchase terms, the one who submits a pleasant and sincere letter will have the upper-hand in a bidding war – and at zero additional cost to the buyer.
Real estate is touchy-feely
The dynamic of a personal letter from a buyer to the seller draws special attention to that buyer’s offer as something more than a simple cold-hearted discussion of price and terms. By reading the buyer’s letter, the seller becomes familiar with the buyer’s character and personality. The letter informs the seller of the humanity behind the offer and elevates it to a position above the other anonymous offers received.
Sellers are emotionally attached to their homes, elevating the home almost to the status of a member of the family. Most home sellers feel more comfortable transferring care of the property to someone they sense as a friend; someone with similar interests, familial makeup, tastes in design, and most importantly, a common love for the home.
Think of a buyer letter as a bonding device, an extension of the introductory handshake. Letters humanize the buyer, establish an all important personal connection and foster a warm understanding between the buyer and seller. As a matter of human psychology, people trust those they know, and a letter to the seller is an opportunity for buyers to let the seller know who they are, how much they love the home, and why the seller should pass the torch to them instead of another, detached candidate.
The purchase agreement offer is essentially an application submitted to a seller to acquire property, offering a sum of money on conditions and asking for approval on submission. Like an employment application, the structured content of a purchase agreement delivers just the cold facts without human nuance.
However, the buyer’s personal letter acts as a gooey sort of cover letter to their application to acquire the property. It uses human terms rather than bare monetary figures and due diligence arrangements to explain why the seller should accept this buyer over a different offer.
As all real estate professionals know, real estate is ultimately a touchy-feely industry. Exposing a buyer by a visit to a few qualifying properties quickly draws out his likes and dislikes.
With sellers, however, buyers’ agents intuitively know they must turn on their personal sales charm to get an acceptance. Thus, a buyer’s agent feels cheated when a seller’s agent denies him the opportunity to present his buyer’s offer. The possibly more effective alternative is the personal touch of a letter from the buyer, attached as page one to the purchase offer. This fully circumvents the exclusion of the buyer’s agent from direct discussions with the seller about the merits of the buyer and the buyer’s offer.
Just as a “thank you note” after a job interview can clinch the deal, a candid letter to the seller captures his attention for further consideration of this buyer’s offer, and may be all that is needed to catalyze the seller’s acceptance.
How do agents get involved?
Agents can encourage their buyers to submit personal letters with their purchase agreement offers whether or not they sense competing offers have been or will be submitted. This practice will become even more prudent when the market begins to heat up again and a seller’s market is created.
But how should a buyer best structure their letter to the seller, and how can their loyal agent help?
As the letter must be sincere if it is to be effective, the prospective buyer should draft the letter themselves, with the guidance of the agent.
Remember, the goal is to establish rapport, so the letters need to let sellers know exactly why your buyer loves their house. This may mean business for the perceptive agent, but it is a personal transaction for the seller as it involves the family home. The seller will likely return to see the home from time to time, and want to be able to knock on the door and just say, “Hi, remember me? I used to live here.”
Encourage the buyer to be as honest and concise in his wording as possible, providing specific examples of what the buyer appreciates about the seller’s property, landscaping, neighborhood and area amenities.
In particular, the buyer would be wise to specifically comment on components of the property which were replaced and upgraded by the seller. This compliment will echo with special resonance for the seller, who paid for the improvement from savings or with sweat equity. Everyone likes to receive kudos for a job well done.
Buyers can sweeten the deal by explaining why the seller’s specific property would be perfect for the buyer – and correspondingly well cared for. For example, buyers should enthuse if the property is close to their place of employment or children’s school, is large enough to accommodate the family or has perfect landscaping and lot orientation for hosting social gatherings.
The buyer is best advised to steer clear of any negative comments about the property, or ways in which the buyer wishes to improve the property. The information will not benefit the buyer’s position. Worse, its communication runs contrary to his goals. Similarly, the buyer should not comment on renovations he intends to make should the offer be accepted. The impression created is that the property isn’t satisfactory, which dampers the buyer’s argument.
The agent must advise the buyer to speak highly of the property, but not state anything that would impair the buyer’s bargaining power by causing the seller to counter rather than accept the offer – unless it is to offer the buyer the right to buy the property at the best competing offer submitted. Though the buyer must speak of the property in glowing terms, it is imprudent to give the seller the impression the buyer would go to any financial means to acquire the property.
Ultimately, the letter should be clear, cogent and concise. And be assured, the seller isn’t expecting a PhD thesis from the buyer, but rather a sincere statement of why the buyer’s offer should be favorably considered and how the buyer will nurture the seller’s property if the offer is accepted.
A buyer’s letter may not always be a game-changer, but in a highly competitive bidding situation, it may be enough to get him the property – and the insightful agent a fee.
Credit given to the first tuesday Journal Online — P.O. Box 5707, Riverside, CA 92517