5 Tips To Improve Your Odds in a Multiple Offer Situation
“Multiple offers? I thought we were in a Buyer’s Market?” Well, it certainly IS a great time to buy in that we are seeing interest rates that are still at historical lows coupled with housing prices that are more affordable. But on the other hand, here in the San Francisco & Peninsula area, we are seeing an increasing number of multiple offer situations. For example, on the last home my clients submitted an offer for, there were 26 (yes TWENTY-SIX!) offers, all of which were put in within the home’s first two weeks on the market! Whatever the reasons for this, it’s become clear that if a home is well priced or below market value, there’s a good possibility that prospective home buyers will find themselves in a multiple offer situation. Here are five tips to help make your offer stronger:
- 1) PRICE – no matter how the market changes, this will always be one of the most important issues to a seller, whether you’re dealing with a bank or a “real” seller. Be sure to look at market activity in the area and then decide how much you are willing to pay for the home. Just ask yourself: “How would I feel if someone else bid a little more than me and got the home instead?” Of course, don’t offer more than you feel comfortable with, but keep in mind that you might only have one chance. Now is not the time to lowball.
- 2) KEEP IT CLEAN – what I mean by this is, try to keep your offer as simple as possible without asking the seller to do a bunch of work on the home. Home sellers are trying to sell the home with the least amount of inconvenience, especially if you’re talking about a bank-owned property. Of course, if it looks like you’re going to need to do some work and you need a little more cash upfront, you can negotiate for up to 3% of the purchase price in some closing costs, but be aware that this will mean that much less profit for the seller (hence, you’ve just reduced your edge in terms of price – see tip #1).
- 3) TIMING IS OF THE ESSENCE – as mentioned above, homes that are well priced or below market will often sell rather quickly. If you are serious about buying a home, make sure to get pre-approved and have your loan agent and real estate agent get in touch with each other, so that you’ll be in a position to submit an offer as soon as you find the perfect home. I don’t believe in rushing my clients, but on the other hand, I’ve seen far too many miss out on a purchase because they took too much time “thinking about it.”
- 4) PRESENTATION MATTERS – although the price, terms & timing are essential in presenting a good offer, it’s also important to make a good impression on the seller and listing agent. All other things equal, it will help sway things in your favor if the offer is presented in a complete and professional manner. Be sure that your offer includes a cover letter, a pre-approval letter, and a copy of your deposit (earnest money) check. If the seller provides disclosures, sign them. If you’re purchasing a bank-owned house and the bank requires you to get pre-qualified through one of its agents, do it. If you’re dealing with a home owner, you might even consider writing a nice letter introducing yourself and telling them how lovely their house is…couldn’t hurt, could it?
- 5) REPRESENTATION MATTERS – find an agent who can assist you with all of the above. A professional and qualified agent will help guide you through the home buying process and make sure that you have all the resources you need in order to make an informed decision. He or she will be in contact with the listing agent and help present your offer in the best light possible.
This blog is already longer than intended and I’m sure there might be other issues I haven’t covered here, so I’d love to hear thoughts from other agents and home sellers on this subject. While it’s not easy being in a multiple offer situation, the increased activity among home buyers is definitely a good sign for the real estate market and the economy as a whole.
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12 Responses to “5 Tips To Improve Your Odds in a Multiple Offer Situation”
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Great information Jean. Might you have an opinion as to what type of listing situation might be a property which would command multiple offers. As an example, is it as simple as location,or price range, or single family home, or short sale, or lender owned, or a seller with equity that maybe has been relocated or purchased another home in the area or ???????????
As a buyer it might be a great advantage knowing what situation might afford me the least, or maybe the most competetion. Appreciate your thoughts either by new post or a continued comment thread and i encourage others to share their opinions and experiences
Thank you Jean
multiple offers, at this time, i agree is a good investment. but it also always boils down to maintain good value for a good offer; you tips are very helpful, and practical – just what people in real estate need. thanks, i find these very useful.
Great post, Jean. I’m encountering multiple offers in almost every offer situation involving foreclosures, from Belmont to San Jose. Double-digit offers (i.e. over 15) is more common than ever before, but the most insane one recently was 89 offers for a $243K home in San Jose that ended up selling for $295K (see my blog post at http://www.gorydetailsblog.com). It’s crazy out there in the lower third of the market these days.
Jean,
What a well written blog and excellent points!
You asked for suggestions and a couple of the newest “tricks” i am hearing from our office collegues are that:
Some agents are writing all cash offers with 15 days close of escrows when in fact they are getting financing, asking the listing agents just before the 15th day for an extension and explaining that the cash was not available, and that there needs to be an extension on close of escrow, knowing that the l/a and seller are already hooked in.
Also, agents are writing writing offers for their clients w/o the clients seeing the house saying the clients are not available and they were instructed to write the offer.
Interesting (and deceptive) and some things to be aware of in multiple offer situation!
Brian
You hit it right on the money. It’s critical right now to make sure that you put your best foot forward and have all of your ducks in a row. Even then, it’s tough.
One last thing I would say to buyers is that they should definitely listen to their agent’s recommendation on price. Very often, we can tell that the house being sold is priced way under market simply in order to garner the huge over bids. If we say you need to go $60,000 over, we are genuinely trying to help you.
Conversely, if your budget is $300,000 and the house is under-priced at $275,000, we are not being lazy or mean when we tell you that it may be a waste of time to bid. We’re just trying to save you the heartache of waiting and not getting the home….meanwhile missing out on others that you may be able to afford.
Jean,
Great information, if your five steps are followed the chance of an accepted offer increases dramatically.
Larry
Great points Jean. You are right about properties priced well, and receiving multiple offers. I tell my clients the listing price is just a “sticker Price,” as Terry Birt says. Buyer has to offer the best price for the house and as you mention keep it clean and make your offer as strong as possible.
Shokoo
Thanks for all the comments.
Ed – I’ll be sure to check out your blog and pass it on.
Michael – that’s an interesting point and perhaps fuel for another blog in terms of which listings would have more potential for a multiple offer situation. I’ve definitely seen this happen on REO (bank-owned) properties which are often listed below the market.
Jean,
Excellent!! I don’t think buyers understand the importance of the presentation. I have found that to be extreme important. I try to include proof of fund to close. It shows professional representation and that the buyers are serious and capable. Also building a repoire with the agent is a big plus.
Buyers should not be afraid of multiple offers. Many of the offers may not be competitive. My goal is to be close enough to get a counter and then I did my job and it is up to the buyer.
Great Post Jean,
You covered many good points in how to increase your chances of getting an offer accepted. Of course there are many other factors that are involved.
Lee, proof of funds to close sounds like yet another tool in the box to help your clients offer get accepted. Thanks everyone for sharing your opinions and thoughts.
Jean,
You missed an important tip, an important one that I just learned the hard way. If you believe that you’ll be in a multiple bid situation, hire the listing agent to represent you. Then, you’re sure to get some favorable bias towards your contract.
There’s got to be some law against this in VA….
v/r
Sore Loser
Dear Sore Loser,
I feel your pain. Keep in mind, however, that there are pros and cons to working directly with listing agents, and it can sometimes be a huge plus to have an agent who is “baised” towards you and working exclusively on your behalf. As a listing agent, I would hope to work in the best interest of the seller and not simply forward the offer that benefits me personally. The same goes for when I’m representing a buyer. Best wishes to you in your search for a home!
Jean