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How to Win in a Multiple Offer Situation
Dated: July 14 2020
Happy July! Along with the weather, the real estate market is also really heating up! Buyers are taking advantage of low interest rates. The problem is, there still aren’t enough homes out there for sale, so buyers are still competing with one another.
Here are some insider tips for anyone in the market to buy now or planning to buy soon.
Find a great agent with as much experience in negotiation as possible. Have your agent build rapport with the listing agent. Ask them to find out what the seller’s top deciding factors might be. See if they can find out info about the seller you can put in a letter to the seller. The more personable, the better. Where are they moving, what is their occupation? Do they have kids, are they retiring? Do you have any commonalities you can mention? This is all good stuff for your seller letter.
Compose a heartfelt seller letter. Check Google Images for “Buyer Letter to Seller examples” for some ideas.
Buyer Financial Sheet: If you have an exceptional job with job security or great assets, fill out a Buyer Financial Sheet. Ask your agent for one. This will show your job details as well as any assets that can make you look stronger than other buyers.
Find a great lender: Have your lender call the agent to introduce him/herself and put in a good word for their company and you. This shows that the real estate team you chose is organized and professional. Ask your agent to facilitate this for you right before the offer is sent or directly afterward.
Remove contingencies such as any inspections and/or the appraisal when possible – “As Is” is more appealing to the Seller.
Smart Inspections: If an inspection is necessary, ask to perform a pre-inspection before submitting your offer. This way, you can remove your inspection contingency prior to submitting the offer (if you like the inspection results). A pre-inspection makes the buyer aware of any issues prior to writing the contract but allows the Seller to go under contract without an inspection clause that could cost them an unknown amount of money later. If that is not feasible, do a home inspection with a “right to cancel” only. This removes the “right to negotiate” repairs but still allows you to cancel if you are not happy with the results. Any seller will choose that over a “right to negotiate repairs” every time. Remember that you will be waiving any needed repairs that may turn up at the inspection, but you can still void the contract if you don’t like the results.
Remove the appraisal contingency if possible. You can do this if you have extra cash on hand to bring to the table if the appraisal comes in low. You would be agreeing to pay more than the house is worth according to the appraiser, but if you want it badly enough, that is up to you. Keep in mind that your lender will not loan on a sale price that is higher than the appraisal without more cash down.
Conventional Financing: Use no financing or conventional financing when available. Sellers prefer conventional financing because FHA and VA loan approvals are slanted toward Buyers, requiring the Sellers to make more repairs before they approve the loan.
Down payment: Use the largest amount of money down possible or show a higher qualified amount on prequalification letter from a lender. This shows you can withstand any issues that may come up during underwriting.
Ask for NO Closing help: Closing help is almost a non-starter when competing.
Close Quickly: Put a fast settlement date in the offer or be sure your agent lets the listing agent know that you are flexible to the seller’s timing needs.
High Sales Price: Offer a high sales price or add a high Escalation Clause. Escalation is for countering other offers the Seller receives. It is the maximum amount a buyer is willing to increase the price above the other offers. It shows motivation and a willingness to negotiate.
Buying in a Seller’s market can be stressful, however having the right agent by your side can make all the difference. Be sure to go over these strategies with your agent if you find yourself in a bidding war. Best of luck out there to everyone!