In a competitive market, buyers are always looking for a strategy that could give them an edge when it comes time to make an offer on a property. In today's market, we find ourselves, more often than not, in a multi-offer situation. This is when multiple buyers are interested in a home and submit offers.
The best strategy in these situations is to think like the seller. Here's how the multi-offer process works on the seller's side.
Once multi-offers have been received the sellers can:
• accept the best offer
• wait for more offers
• give parties a deadline to submit “highest and best” offers
• counter an offer
• decline offers
Multiple offer situations are nice for the seller’s agent and their client. But, buying a house with multiple offers can be frustrating.
The resulting bidding war is not a transparent process. As a buyer, you are guessing what the other offers are and trying to offer more without offering too much.
The seller's agent will then present all offers to the sellers and make recommendations based on the differences and highlights of each one. It is always the seller’s choice on what to do.
Once they’ve chosen an offer, they can counter or accept it. When executed, the listing agent will inform the losing offers that they were not selected, allowing them to move on and try their luck on another home.
Now that you understand how a multiple offer situation works on the sellers, it is time to learn how to win one.
#1 Pay for the extras. If offering more money is not an option, consider paying for items such as title policies, surveys, or residential service contracts. You can also offer to pay for any renovations or upgrades the house might need, saving the sellers money and time.
#2 Consider a personal letter.
A letter from potential buyers explaining why they are right for the property can offer an emotional pull if done correctly. However, some listing agents warn their sellers against reading personal letters because of the potential for fair housing-related claims.
#3 See if the lender can contact the listing agent.
Having the bank contact the seller’s agent can offer additional assurance that the sale will close.
#4 Be Flexible
Be flexible when it comes to your closing day. Considering the sellers hold the power in these situations, you need to play by their rules. If they want a shorter or longer closing day, talk it over with your agent to see if it is doable.
Multiple offer situations are one of the most frustrating and opaque problems presenting home shoppers in the 2020s.
The classic definition of the “market price” is what a willing buyer and seller decide on! But is that what is happening in multiple offer situations? No! The buyer is grasping around in the dark trying to guesstimate where a winning offer might lie. Might they have offered more if they knew what the competing offers were? Might they have offered less if they had known they were $30k over the next highest offer?
To navigate these tricky waters we suggest working with a real estate agent who understands the market and can analyze the seller's situation. You need a real estate agent who is going to ask the right questions and offer you the best advice. If you need assistance buying the home of your dreams, please contact me today. I'm always on your side.
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