In locales all over North America, housing supply is tight. The homes that are on the market are often snapped up quickly.
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. Jones lists a lovely 3-bedroom, 3,000-square-foot home on two wooded acres. 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. Jones wants a solid, but quick sale on her house. In fact, Mrs. Jones has an all-cash offer on the table to purchase her next house. Time is pressing and Mrs. Jones wants nothing to go wrong with her home sale.
Mrs. Jones 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 purchase and maintain the house. Mrs. Jones 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. Jones 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. Jones 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. Jones, after some negotiations, the buyers came in just $2,000 under the highest bid, but it was the letter that tipped the scales.