Strategies For Winning In Multiple Offer Situations
CONTRIBUTED BYJIM BECKLEY, REALTOR WITH THE ERIC STEWART GROUP OF LONG & FOSTER REAL ESTATE
As we enter the spring market of 2019, the local home inventory is at historic lows. Selling a home is no different than selling anything else; when supply is low and demand is high, prices and competition rise. So how does a buyer position him/herself to win the home of his/her dreams when that exact home is also a favorite of another buyer who is also submitting an offer?
- Be prepared – Are you pre-approved yet? If not, your Realtor will likely urge you to get a pre-approval letter that shows the seller you can indeed afford to buy their home. Additionally, try working with a lender who can get your loan through underwriting ahead of time. This, paired with a call to the agent from that lender when submitting your offer, can assure the seller that there will be no issues completing the transaction. Even further, are you comfortable removing the financing contingency altogether? Working together with your Realtor and lender can help you determine if this strategy is best for your specific situation.
- Price is important but other contingencies matter – Sellers are looking to get the most money for their home investment and often look at the highest priced offers first. However, there are several other important factors that add value to the seller. For example, is the buyer willing to give the seller their desired closing timeline? Does the seller need to stay in their home via a rent back after closing? If you can accommodate, that will save the seller stress and money. What about the home inspection? The buyer can elect to do an inspection for informational purposes only. This protects the buyer’s interests by allowing them to inspect and learn about the home with the option to back out during the contingency period, if they wish. The benefit for the seller is that they will not be asked to repair or credit the buyer money for repair items. What about offering to pay the seller’s portion of the closing costs? Sellers hate the idea of paying the state/county and recordation fees, often totaling 1.25% of the sales price. Offering to pay your half PLUS the seller’s half can be the key to a winning bid!
- Be realistic – Knowing the current marketplace and having good dialogue with a seasoned buyer’s agent can help you better understand the offer process. After reviewing the comparable sales, you and your agent should have a good idea of prices in the neighborhood and how this property stands up to the competition. However, if you know the home you want is in high demand and the seller already has offers in hand, be realistic about what you need to do to compete. An offer below asking price with multiple contingencies may be an exercise in futility and lead to disappointment and frustration.
- Know your limits…and desires – Submitting an offer in any situation is an emotional process. It is enhanced when you find out you need to compete to win! Try not to let the “thrill of victory” cloud your judgment in making your purchase. Set limits on how high you want to go and what contingencies you are comfortable removing…and stick with it! You don’t want to have buyer’s remorse in a year or two knowing you overpaid for your home by $10,000-$20,000. On the other hand, if you know that this home will be your “forever” home and you’ve been eyeing getting into this neighborhood for years and years, paying a little more than what the comparables show may be the right move for you and your family’s budget. Remember, each buyer has their own budget and desires!
Each year I help both buyers and sellers navigate multiple-offer scenarios. Having an experienced agent guide and educate you through the process is key to not only winning, but feeling comfortable with the situation. If you’d like to learn more about these strategies or have other questions about the real estate transaction, give us a call!