It wasn’t but 18 short months ago that we had twice as many homes on the market as we currently do and fewer buyers. Multiple offers happened, but not that frequently. But today, for a home that is priced at market value and in good condition multiple offers seem to be the norm! And especially when you look at the sub-$200,000 price range.
Low interest rates, and a generalÂ consensusÂ that we’ve “hit the bottom” has more and more buyer’s out there looking for a home.
That’s good news if you are selling your home.
That’s not so good news if you are the one trying to buy the home.Â
So, how do you win multiple offer situations?
Buying a home is stressful enough without facing other buyers wanting the same home you have. Here are the tips I give my clients these days:
1) Have your pre-approval letter ready BEFORE you make an offer.
If you find that perfect home and don’t have your pre-approval letter you’ve already lost in a multiple offer situation. Multiple offers means that a seller has choices and they are going to go with not just the highest offer, but the one they consider to be most likely to be able to close the deal.
Of course, I can give you a lead on a terrific mortgage professional if you need one.
2) Trust what your real estate agent is telling you.
Of course, the first step in this process is to find a real estate agent you trust. But I even have clients that just can’t bring themselves to trust that I have their best interests in mind during a transaction (I talked about that here). Assuming your agent really is trustworthy, and many really are, you need to rely on their expertise and experience to guide you through.
Your agent will have a really good idea what it is probably going to take to “win” against the other buyers–and if its really worth it for you to try and win it.
Now, one thing I personally never do is give you a number. That’s not my job. Nor do I ever want that job. Its your money, its your decision. You are the only one that can say if you are comfortable paying X or paying Y or whatever.
What I will do is give you feedback on what I think the house is worth, and let you know if I think your number is competitive or not and why.
3) Remember that there are other fish in the ocean.
The truth is, this isn’t the only house for sale and others are going up for sale all the time. I know… that’s not a very sales-ey thing to say. But its the truth. The worst thing you can do is get caught up in the “competition” thing and lose sight of what is actually happening: you’re about to plunk down a big chunk of money for a home. Trust me, buyer’s remorse is very much real.
4) Figure out what your bottom line is.
One of the most important things you have to do as a buyer is figure out what your bottom line is on that home. What are you willing to pay and still be excited after you start making your mortgage payments? And once you figure out that number, you need to let your real estate agent know.
I know… you don’t want to. But trust me, I need to know. I can’t help you or advise you otherwise.
This is especially true because occasionally a buyer will find a house and be in a multiple offer situation and KNOW that this is the house for them. In these cases, you need to tell your real estate agent. If you really want THIS HOUSE then the advice I’m going to give you is going to be different than if you just really like it.
5) Remember, everything in the Purchase and Sale Agreement is aÂ bargainingÂ position.
There’s a lot more to a purchase and sale agreement than what your offer price is (although that’s obviously veryÂ important). How much of a down payment are you putting down? What type of loan are you using? What contingencies does your offer hinge on? Are you asking for closing costs from the seller? When do you want to close by? All of these things play a big role in the seller’s decision making.
Just because you have the highest offer price doesn’tÂ necessarilyÂ mean its in the seller’s best interest to pick your offer. Again, this is where relying on the expertise of your real estate agent will become so vital. He or she will explain how every part of your offer either helps your position or hurts your position.
The Bottom Line
You need to be working with a real estate agent you trust–and honestly telling them where you are at. And you need to be working with a real estate agent with the expertise and communication skills to guide you through the process. Successfully negotiating an offer in a multiple offer situation requires something from both the agent and the client.