When a property comes onto the market, there is one thing both buyers and sellers tend to focus on more than anything else:Price.And understandably so.If you're selling your home, you want to know how much money you're going to receive. If you're buying, you want to know how much you're going to have to pay.But price isn't the only thing that determines whether an offer is good.There are four major components I look at when evaluating almost any real estate offer: price, dates, deposit and conditions.Sometimes one of those other terms can be important enough that a seller will actually accept less money—or turn down an offer that's higher in price.
1. Price
Let's start with the obvious one.Price is king.When you're preparing an offer, the price should generally be based on recent comparable sales, current competition, market conditions and what the property is worth to you.For sellers, price is usually the biggest motivating factor as well.But it isn't everything.I once represented a seller who received an offer above their asking price after the property had already been on the market for approximately 90 days.You'd think accepting it would be an easy decision.It wasn't.The buyer wanted to complete the transaction in approximately two weeks, and the seller simply couldn't accommodate those dates.They had nowhere to go.Despite offering a price the seller would have happily accepted under different circumstances, the buyer couldn't make the deal work.That's why I like to say price is king, but dates are queen.2. Dates
Closing dates can have a surprising amount of value in a real estate negotiation.If you're a buyer who is currently renting, for example, you may have quite a bit of flexibility around when you move.That flexibility can potentially be used to your advantage.Imagine you're making an offer on a vacant property.The seller has already moved out and is carrying the mortgage, property taxes, insurance and strata fees every month.If you can offer a faster completion date, that might be worth something to them.Perhaps they're willing to accept a slightly lower price in exchange for getting their money sooner and eliminating those carrying costs.Now consider the opposite situation.Maybe you're buying a home from someone who has lived there for 30 or 40 years.They need time to organize their belongings, find another home and physically move.A 30-day closing might be extremely difficult.But you don't need possession immediately.If you can offer 90 or even 120 days, your flexibility could make your offer more attractive than another offer at a similar price.That's why buyers should try to understand what the seller actually wants before writing an offer.Sometimes changing a date costs you absolutely nothing while making your offer considerably more appealing.3. Deposit
The third major consideration is the deposit.In my market, it's common to see deposits around 5% of the purchase price, although deposit amounts can vary depending on the transaction.The deposit demonstrates that the buyer has meaningful money committed to the deal.Imagine two buyers submit otherwise identical offers.Same price.Same dates.Same conditions.But one buyer offers a very small deposit while the other provides a substantial deposit.From the seller's perspective, those offers may not feel identical.A larger deposit can give the seller greater confidence that the buyer is serious about completing the transaction.This can become particularly important in a multiple-offer situation.Even in a slower market, good properties can still attract competition.If everything else is equal, the strength of the deposit can become one of the factors a seller considers when deciding between offers.4. Conditions
The fourth major component is conditions, sometimes referred to as subjects.Common conditions can include financing, inspection, review of property documents and other due diligence.During the extremely competitive real estate markets of 2020 through early 2022, we saw buyers remove many of these protections in an attempt to make their offers more attractive.Some buyers wrote completely unconditional offers.That was certainly attractive to sellers because there was very little uncertainty once the offer was accepted.But it could put buyers in extremely risky situations.Today, buyers generally have much more negotiating power and can usually include reasonable conditions.That doesn't mean conditions have no impact on the strength of an offer.They absolutely do.Not All Conditions Are Equal
Consider a subject-to-sale offer.This means the buyer's purchase is conditional on selling their existing home first.From the seller's perspective, that's substantially different from accepting an offer from a buyer who is ready to proceed immediately.The seller now has additional uncertainty.Will the buyer's home sell?How long will it take?What happens if their sale collapses?For the seller to accept that additional risk, they may expect something in return.And sometimes that something is a higher price.A buyer who can remove the subject-to-sale condition may therefore be able to negotiate a better purchase price.The same general principle applies to other conditions.The cleaner and more certain the offer, the more attractive it can become to the seller.That Doesn't Mean Buyers Should Remove Important Protections
I don't generally recommend buyers remove important financing or inspection conditions simply to make their offer more attractive.Saving a few thousand dollars on the purchase price isn't particularly helpful if you discover afterward that you can't obtain financing or that the property has a serious problem.But there is an important distinction between removing necessary protections and completing some of your due diligence before making an offer.For example, a buyer who has already done substantial work with their mortgage professional may be in a stronger position than someone who hasn't even submitted their financial documents.Depending on the property and circumstances, there may also be documents or information that can be reviewed before an offer is submitted.The more prepared you are, the more confidently you can structure your offer.The Highest Offer Isn't Always the Best Offer
This is one of the biggest misconceptions in real estate negotiations.Imagine a seller receives two offers.Buyer A offers $1,000,000 but needs a long list of conditions, has a small deposit and wants a completion date that is extremely inconvenient for the seller.Buyer B offers $990,000 with strong financing preparation, a substantial deposit, reasonable conditions and exactly the dates the seller wants.Which offer is better?There isn't an automatic answer.The seller has to decide what the differences in certainty and convenience are worth.For some sellers, another $10,000 is worth accepting additional uncertainty.For others, it isn't.That's why simply asking, "What's the highest price?" doesn't tell you everything about an offer.Buyers Can Use Terms to Negotiate Price
This is where understanding the seller's motivation becomes extremely valuable.As a buyer, you may not be able—or willing—to offer more money.But perhaps you can offer something else the seller values.Maybe it's a faster closing.Maybe it's a longer closing.Maybe it's a stronger deposit.Maybe you've completed enough due diligence to write a cleaner offer while still protecting yourself appropriately.Those things can have real negotiating value.A strong offer isn't necessarily the offer that gives the seller everything.It's an offer structured around the things that matter most to that particular seller.Sellers Should Evaluate the Entire Offer
The same lesson applies to sellers.Don't become so focused on price that you ignore everything else in the contract.Look at the dates.Look at the deposit.Look carefully at every condition.Understand how long the buyer has to remove those conditions and what needs to happen before the transaction becomes firm.A slightly lower offer with much stronger terms can sometimes be worth more than a higher offer carrying significant uncertainty.Every situation is different.Price Is King—Until It Isn't
At the end of the day, price will almost always be the biggest consideration in a real estate transaction.But it isn't the only one.When I'm evaluating an offer, I'm looking at four major components:Price.Dates.Deposit.Conditions.Understanding how those four pieces work together can make you a much stronger negotiator, whether you're buying or selling.Because sometimes the best way to improve an offer isn't to change the price at all.Written by:
Steve Karrasch PREC
Karrasch Real Properties Team
Macdonald Realty
Steve Karrasch PREC
Karrasch Real Properties Team
Macdonald Realty