It can be exciting and nerve-wracking to submit an offer on a home. After spending copious amounts of time saving for a down payment, acquiring a pre-approval, and finding a home, potential homebuyers can become reinvigorated by the offer submission process. Once a homeowner approves of an offer, a buyer is one step closer to acquiring the home and building homeowner equity.
An important step in submitting a formal offer includes writing an offer letter. While not mandatory, including an offer letter can give a buyer a competitive advantage that humanizes the buyer and emotionally appeals to the seller. Even though moving forward on a home purchase includes many steps, buyers who take time to submit a personal offer letter put themselves in a stronger position to receive an acceptance.
Real estate agents often help their clients write their offer letter. Buyers can utilize their agent’s help, reference a real estate offer letter template, or attempt composing a letter independently. The following article highlights the importance of an offer letter and provides some tips to help create a compelling letter.
What is the Purpose of an Offer Letter?
It is important to note that sending an offer letter differs from sending an offer. A homebuyer who submits an offer on a house actually bids on the home and indicates the price they are willing to pay and any contingencies the seller must meet. The seller then reviews the offer and can move forward with an acceptance or counter or reject the offer.
As part of submitting the offer, a buyer can include an offer letter for the seller to read. A well-crafted offer letter gives the buyer an opportunity to clearly communicate who they are and why they hope to buy a home. They can demonstrate that they are serious about moving forward with the offer and discuss their personal reasons for wishing to purchase the home from the seller.
The Power of an Offer Letter
An honest and thought-out letter can become the tipping point in a seller’s decision-making process. A seller who is on the fence about a buyer may feel connected to them after reading their offer letter. In a best-case scenario, the seller may even consider an offer under the asking price if it accompanies a compelling letter. A sentimental seller who takes pride in their property can feel emotionally tied to the process and therefore feel more inclined to move forward in selling their home to someone with positive intentions as opposed to a developer who wishes to tear the structure apart.
Some sellers may not feel as attached to their homes and not consider offer letters. While the buyer may submit a letter, there is a chance the seller does not review it and, therefore, only moves forward with the most competitive financial offer with fewer contingencies. However, buyers still put themselves in the strongest position by submitting a letter.
Offer letters become increasingly important for buyers who do not intend to submit an offer at or above asking. Someone who comes across their dream home that’s slightly out of budget can still submit an offer, and in this case, should attach an offer letter to convey their strong desire for that specific property. Under the right circumstances, they may walk away with the keys.
What Should an Offer Letter Include?
If you decide to write a real estate offer letter, you should make the letter as personal as possible so you connect directly to the seller. Even if you do not consider yourself a strong writer, you can refer to your real estate agent and reference offer letter templates to ensure you create a compelling piece. No matter how you decide to complete the process, make sure to write from your perspective and make the letter sound like it is from you.
Your letter should reference a few personal details about yourself that a rental company or developer would not be able to claim. Including touches about how the neighborhood is great for your kids, how the accessible finished basement creates an ideal space for your in-law apartment, or even how the in-ground pool is something you always dreamed about as a kid can make you seem more real and personable.
The offer letter does not need to include every personal detail about your life, but can add a few touches to brighten up the piece and make it more appealing to the seller. An offer letter should only be about a page long to ensure the seller maintains interest. The seller can come away with a sense of satisfaction and relief knowing that they plan to sell their home to a real person who intends to use the space.
How to Write an Offer Letter
You can follow the below tips to construct a strong and convincing offer letter:
Be honest
Potential buyers can fall into the trap of embellishing their offer letter to make themselves sound as appealing as possible. However, sellers can sometimes see through an overly frivolous letter and may feel less inclined to sell to someone who tries to put on a front. Buyers should be honest about their intentions and avoid false claims and promises. If you plan to renovate the kitchen to your liking, you do not have to disclose that. However, you should avoid saying how it’s your dream space to cook a meal for your family.
Be positive
This might be the first, and possibly only, impression the seller ever has of you. Be sure to choose words, tones, and styles that create a positive impression and leave the seller wanting to work with you. You can incorporate statements about what you hope to do when you live in the property and how this home could help you accomplish your goal of homeownership.
Be flattering
Sellers usually take a sense of pride in their homes and likely spent years and money investing in their property. Therefore, you should praise the seller’s efforts and highlight specific touches and features that made you interested in the property. Using flattering phrases like “I was immediately drawn to the well-cared-for garden” or “my partner and I really appreciate the interior additions” can help establish a positive impression.
Be concise
It can be easy to get carried away when you are talking about yourself. Sellers often have little time to read an extraordinarily long and wordy letter. Something that takes little time to read, makes a statement, and leaves an impact is all the buyer needs to sway the seller towards acceptance. If you find your letter exceeds one page, go through the letter sentence by sentence and ask yourself which phrases are most important.
Don’t talk about business
You only have so much time to discuss your personal intentions and hopes for the property. The offer letter is not the space for including hard figures or contingencies, as sellers can refer to the rest of the formal offer for those aspects. The offer letter solely provides buyers an opportunity to prove their humanity outside of the numbers.
Conclusion
Prospective buyers can use an offer letter to convince a seller to accept their offer. A buyer who takes the time to include a well throughout and personal letter will connect to the seller and potentially sway them to accept an offer, even one potentially below the asking price. Buyers should consult with their real estate agent to ensure their letter follows standard practices and reads well enough to appeal to sellers. Once a buyer writes their letter, they should read it aloud to themselves to get a sense of how the sellers will interpret it.
