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How writing a thoughtful offer letter can save you thousands of dollars in your home purchase, plus the letter we used in our own process that saved us $3,000.
The Hubs and I closed on our first property! It means an elevator for the world’s stumpiest corgi. It means central a/c, a refrigerator that can hold more than 10 frozen meals, and the ability to lay on the floor and not actually touch every wall while doing it. I took a break from unpacking boxes to reflect a little on the process. I previously wrote about our observations on the home buying process, so I won’t rehash what we’ve already covered. But one element that really stuck out to me about purchasing homes is the very human element to it, and the strategy it necessitates to successfully navigate the process.
When I purchase a stock or a bond, my order is electronically entered into a queue and matched up against a price-sorted line of sellers until we match. It’s incredibly efficient but all human elements have been removed. By contrast, home buying is still very much a one-to-one transaction between two people. It means that it can be very inefficient and it means that there’s a large human element to it. I don’t think either is necessarily better, just different. It highlights, though, that a different approach may be valuable when approaching real estate.
Obviously a seller is going to care principally about getting the best price, but that doesn’t mean that other elements aren’t also weighed in the equation. And one of the places we discovered we could connect with the sellers was through a genuine, thoughtfully written offer letter.
The market in which we purchased is incredibly hot. The average time a unit stays on the market is under 21 days – that includes several days of attorney review so the time from list to accepted offer is generally more like 14-18 days. There are almost always multiple offers, sometimes upward of a dozen. And most properties are going for above ask. When we submitted our offer, we wanted to distinguish ourselves and share the very real excitement we had about their home. This is what we came up with, with names changed. Note the sellers were working with a relocation company who was managing the process.
Our Offer Letter
We were told by the agent that the sellers loved our letter. They selected our bid over others who were offering more. Our bid was $3,000-$5000 below other offers, but they went with us. They didn’t even come back to ask us to match.
We had previously lost out on another property. In that one we were more than $30k off from their best offer, but they also reached out and told us they loved our letter and would invite us to re-bid, something they were not offering to others. If homebuying were completely efficient and run by robotic automatons, none of this would have happened. But the buyers and sellers are often just regular families like yours and mine.
We never met the sellers (they closed remotely), but we felt a very real kindness from them during the process. They volunteered to leave us their extra paint because I mentioned I actually really like the colors they had chosen. They had the home professionally clean before they left – I couldn’t find even a streak of dust when I began my usual new-place-cleaning routine. Even the topmost shelves were free of dust. They left us all their old cleaning supplies and a vacuum cleaner. I have no idea if it was the letter that established that human connection or we just lucked out and matched with a couple who happen to be incredibly generous. Perhaps it’s a bit of both.
Nonetheless, it has cemented the belief for me that celebrating the human element of real estate can be a win-win for both sides. I suspect offer letters are most effective in highly competitive markets, where showing your enthusiasm doesn’t reveal anything that could be used against you (they already have a ton of interest, anyway). And this couple serves as a great example for me and Mr. Money Habit in the kind of people we want to be in the world. It didn’t take much for them to make this an incredibly magical experience for us as first time homebuyers. Whether we had gotten a discount on the property or not, all the other things they did really made our first home buying experience a positive one.
If you find yourself bidding in a competitive market, perhaps this idea can help you as well. We now commence, by the way, the giant yawning silence I promised as we frantically try and unpack boxes and figure out this homeownership thing (did you know there are half a dozen colors of caulk?). Hopefully we’ll be back to regularly scheduled programming next week or the following week. Until then!
What was your home buying or selling process like? If you’ve been a seller, did anyone do something unusual which stuck out positively in your mind?