Writing a winning offer in a competitive market

My first-time home-buyer clients were looking to trade the hustle and bustle of condo-life in Navy Yard for a single-family home with a yard in a friendly, quiet community. Unfortunately, in Spring of 2024, so were many… many other people. In fact, the market segment they were trying to buy into was the tightest segment in the region. 

But I have a system for working with buyers that has helped hundreds of clients win in competitive markets. 

First, we had a discussion about what it was they thought they wanted. Not just bedrooms and bathrooms, but style, vibe—what do they not have now that they feel like they need? Do they have hobbies they’d like room for in their future home? How long do they plan to own this home and what does it need to have in order to integrate with their lives? 

Then we went out on a “First Out.” I take clients to see 4-6 homes that meet their needs based on our initial conversation. We pinky promise they will not find the home of their dreams, because this initial outing is just about getting to know the market and testing assumptions. Almost every client that joins me for a First Out changes their search in important ways by the end of the day. 

The other major benefit of the First Out is that it gives me a chance to teach them about major cost-of-ownership issues to consider when buying. We talk about the different elements of a home—from siding to plumbing to HVAC to roofing to windows—and discuss what types we’re likely to see, how to identify the average lifespans, and likely replacement costs. In fact, my buyer clients are renowned for visiting open houses after this First Out and heading straight for the utility room to identify HVAC ages before touring the rest of a home! They’re educated and they know what to look for. 

After my clients were fully educated on the market, we started the search for their perfect home. I set up a custom digital alert that would notify them if a home that met their criteria hit the market. As soon as something did, we made plans to get into it and check it out. 

My clients found a couple of homes that they loved and put in offers on them. We lost our first few offers and we were okay with that! In each case, I calculated valuations of the homes and explained to my clients what I thought the true market value of the properties was. I gave them the option of putting in offers over the possible market value and they did—to the extent they were comfortable. So when we lost out to other people willing to pay more, it wasn’t devastating. 

Then it happened. An absolutely gorgeous home that checked every single one of their boxes hit the market. But it wasn’t in one of the neighborhoods they had considered. It was listed as “Coming Soon,” which meant we had time to do some research and make an appointment to see the home the second it went to “Active” status. Before seeing the home, I gave them homework—I wanted them to drive through the new neighborhood, visit the local groceries and coffee shop, and have dinner at a local restaurant (all of which I recommended). Before the home hit the market, I also ran a full valuation analysis—determining which recent sales were most similar to this one, calculating both a price per square foot analysis and a comparable property analysis, to have a perspective on what the likely market value of the home was. 

We visited the home. And. It. Checked. Every. Box. I mean take a look at the pictures!? How could it not? The home exceeded all expectations… and based on my valuations was priced at least $100k under it’s probable market value. 

I worked with my clients to develop the most compelling offer we could put together. The biggest question was how much to offer. On one hand the home had been listed at $100k under what we believed it was worth. On the other hand, we knew other people would likely have access to the same data and might come in with offers close to our higher value. We decided to waive the financing contingency, but that meant we needed to be certain that my clients could handle a low appraisal situation. 

When you take out a loan, the lender almost always is required to send out an independent third party appraiser to confirm the value of the property. If the appraiser says that the home is worth as much or more than the contract price – fantastic! But if the appraiser doesn’t think that the home is worth as much as the contract price, you’re stuck. The bank can ONLY lend based on the contract price. So if a home is under contract for $1M and appraised for $900k, the loan can only be based on a $900k value. If you don’t have a contingency to protect you in the event of a low appraisal, you have to make up the difference between the appraised value and the contract price. You can do that by reducing your down payment and moving money that would have been part of your down payment to use it to make up the difference. You can do that by bringing cash. When my clients put in offers that are significantly over list price, we walk through all scenarios and make sure they are comfortable with any outcome. 

In this case, my clients decided to come in with an offer $175k over list price. 

The day of the offer deadline came and… WE WON!!!! Wonderfully, my clients’ offer only ended up escalating to $118k over list price. When the appraisal came in, it was a full $15k OVER the contract price! 

In this case it paid to have a process in place. Most first-time home-buyers can’t do this. My process makes all the difference—and my clients are well educated. It also paid to have a real sense of the value of the property—both from their own lived experience shopping with me and my research. I’m thrilled for these guys. They’re beautiful humans who get to start their lives together in a beautiful home.

Work with Katie Geffken

Katie is founder and partner agent at Collective Property Consultants. A marketing strategist and local business owner turned Realtor®, Katie has an entrepreneurial spirit and loves to make a positive impact in people’s lives through her work.