"Multiple Offers" - A Seller's Greatest Hope and a Buyer's Greatest Fear
Over the last two calendar years, an astounding 40% of our buyer sales were negotiated and won in a multiple-offer situation.
This is a timely blog because we have seen multiple offers on almost every offer we have written thus far in 2018!
Buyer's optimism, low inventory and mortgage rates creeping higher have created a perfect storm of demand to start the year. What does this mean for you as a buyer, and how can you position yourself to win your dream home in this evolving and competitive marketplace?
This is an absolutely essential question you should ask your agent during your initial consultation. Ultimately, multiple offers should not create fear but they should demand a dialogue with your agent on what has worked for them in the past.
Here are five multiple-offer thoughts/techniques that our team has used over the years. Full disclosure, we won't give away all our secrets here because these strategies are an asset to our clients both present and future.
1) Consider what is important to the seller!
The worst thing that can happen as a buyer is to find out, after you lost a deal, that you were willing to do something that was important to the seller. For example, a seller may want a specific settlement date for ideal timing purposes and your settlement date preference may be flexible. Or perhaps the seller wants peace of mind that you won't nickel and dime them on the inspection so you may opt to buy the home "AS IS" with a short inspection time-frame. Bottom line, your agent should call the listing agent and ask, "What is important to your clients?"
2) Does your offer create confidence in the listing agent and ultimately the seller?
When a seller accepts a contract, they want to be as confident as possible that the buyer will perform upon the contract they have signed. If you have a larger earnest money deposit (EMD), shorter contingencies and a reputable lender, it can make all the difference. Remember, sometimes the smallest detail can win you the deal so don't overlook anything.
3) Put your best and final offer first!
The worst feeling as a buyer is to know that you didn't present your best offer first because you thought there would be room to improve your offer later. Your agent should ask the listing agent, "Are your clients looking for best and final first or will they negotiate after the fact with a buyer?" Most commonly in multiple offers, best and final offers are presented from the outset. Remember, a seller is often reviewing many offers and can't respond to each individually. Therefore, best and final is customary and a seller simply accepts one among the bunch.
4) Have your lender call the listing agent!
Nothing exudes confidence and professionalism like a phone call from the loan officer to the listing agent. Imagine your loan officer calling the listing agent and saying to them, "this deal is extremely solid and I have vetted the buyers fully and completely. Please convey to your sellers that we have the highest degree of confidence that this loan will be approved on time and with no hassles to your clients!!" If all other terms are equal, a phone call from the loan officer as well as the bank's reputation in the Realtor community can be a difference maker. Don't be afraid to ask your agent, "how is my mortgage company perceived in the marketplace?"
5) Don’t be afraid of using an escalation clause!
Refer to one of our previous blog’s on escalation and the tremendous impact it can have on winning you the deal in multiple offers.
There are many additional techniques and tips that we will provide throughout the home buying process with our clients. The most important advice we can ever give our clients is to make your best offer while staying within your comfort zone. We never want our clients to enter into a contract that they will regret. Therefore, it is imperative to take a long term and relational approach in our business.