Winning A Multiple Offer Situation Without Losing Your Lunch
Have you ever had a time when you wanted something really bad, like when you missed lunch and you’re at the gas station and there’s a super-sized candy bar or maybe one of the fruit pies that catches your eye in the checkout line? You know it’s not healthy, but standing behind the four other people waiting to pay, the snack calls to you. You can almost taste the gooey sweet goodness on the inside. Your mouth starts to water and you can already feel it in your hand and can imagine how good it will be. Before you know it you have not only purchased the snack but you’ve eaten up every bit of it. Your tummy doesn’t feel so good and you’ve got part of it all over your face!
Well, sometimes being in a multiple offer situation can be like that. The real estate market today is starving for listings and it seems like you’re almost always in line to pay. The good news is that you don’t have to end up feeling sick if you have the right agent helping you and you follow some simple tips:
- Know your limits. This sounds simple, but before you even start the process of buying a house today, you need to know the limits of what you are willing to pay. Your agent should be able to help you select a lender that will be able to analyze your financial position and tell you what amount for which you qualify. Taking that into consideration, along with how much you want your monthly payment to be can help you determine the top of your price range. Knowing this will help you to stay within the boundaries you’ve set for yourself and keep you from having the sick feeling of buyer’s remorse from biting off more than you can chew.
- Provide a clean pre-approval or cash. When making an offer today, it is extremely critical that your agent present the offer along with either a pre-approval letter or a proof of funds letter if you are paying cash. These will tell the seller that you’ve started the process of financing already and have done your homework or that you have enough dough to complete the purchase. In the mind of the seller, this removes or minimizes the question of whether you are able to buy the house. It’s important to have your offer look as good as possible when compared to other offers, so this should be from a reputable lender (local, if possible), should be current, and absolutely should be presented at the time the offer is sent.
- Minimize contingencies. To a seller, contingencies in a contract represent risk. The more contingencies, the more risk, and sellers don’t like risk. The biggest contingency in a sale is typically the financing contingency. Cash is King because it takes a huge what-if out of play. 90% of sellers would choose a cash deal over a financed deal even if the cash offer was a little lower. Depending on what you are purchasing and your comfort level with the condition of the house, you may even consider taking out other typical contingencies that most other buyers will have, such as inspections or asking for remedies. This can be a powerful differentiator between offers, just beware that you are using good judgement – i.e., it may not be the best idea to waive inspections on a 150-year-old house, but if it’s a condo built two years ago, it might be a good risk! Or maybe you could say that you’ll do inspections and have the right to back out, but that you won’t ask for the seller to repair anything – even something as small as this can help to set your offer apart.
- Snoop on the seller. No, I’m not suggesting that you stalk them on social media (though I have seen it done on more than one occasion). What I am suggesting is that you have your agent ask the listing agent why they are moving, what’s important to them besides money, and is there anything that the seller would like but wouldn’t be a deal killer, just something that might make things easier for them. Sometimes there are things that may be easy for you to accommodate but will make a big difference in the seller’s experience and stress level. For instance, if you are in a month to month rental situation, it would be easy for you to offer to the seller whatever date is the best for them for closing and even possession where another buyer may be rigid in their timing. Flexibility has won out over money in many of the multiple offer situations in which I’ve been a part over the years.
Those are just a few of the techniques that can help you navigate today’s market. If you do your homework upfront, pay attention to what is important to the seller, and have a great agent, such as one of the agents on the Ryan Reynolds Team at Keller Williams Consultants Realty, you can win in today’s seller’s market!