Some family friends just bought a home here and after hearing the details of their experience, we’re a little intimidated to start the home buying process this summer (we’ve been planning and saving to purchase a home—and we’re almost ready!). Our friends said that the home they ended up buying was actually the fourth home they had written an offer on. The first three homes they wrote offers on had additional offers and obviously, their offer didn’t win the contract. Their agent said it’s just the nature of the market in their price range right now. We’re in the same price range ($225,000—$250,000) and don’t have much wiggle room to move up in price. Aside from increasing the amount we offer on a home, do you have any tips on how to win in multiple offer situations?
Marissa, Grand Junction
Wow! Your observations are absolutely correct! The segment of the market that you are searching in is moving at a very brisk pace and the competition can be fierce! Multiple offer situations are happening with more and more regularity, so as a buyer, you must be ready and willing to put your best foot forward right out of the gate. If you hesitate or make a mistake, you decrease your chances of success exponentially. Don’t be afraid to compete! It’s a bit like dating…If you find just the right one, be prepared to compete and win! Grab hold of a competitive mindset and remember most houses are lost over a fairly small sum of money or an overlooked detail that would have cost nothing!
There ARE some simple things that you can do to help move your offer up in the pecking order when the offers are presented to the seller!
- Be willing to offer more than asking price or include an escalation clause that will automatically increase your offer over and above the next highest offer up to a price ceiling! I have seen many an offer lost over $500 or $1000. If you really want the property and there are multiple offers, go 1-2% over asking price and watch your chances soar! If the home is $225k, offer $229k and my bet is you get it.
- Offer more earnest money than what the seller is requesting. Earnest money is often times an overlooked negotiating tool that absolutely DOES mean something to a seller and can tip the scales if the offer prices are similar.
- Be flexible with the closing and possession date. This will show the seller that you are willing to work with them and make the transition fit their needs.
- Be willing to cover your own or at least part of your own closing costs. Over 70% of the offers I see contain seller paid closing costs. Eliminating these closing costs indicates to a seller that you are a stronger buyer. After 16 years and thousands of contracts negotiated, it is a fact that most sellers would prefer buyers pay their own closing costs.
- Do not ask for personal property or things that the seller is not offering as inclusions with the property. If they have not included the nice new looking refrigerator, don’t ask for it. If you find their lawn furniture comfy don’t try to throw it in, go buy your own. I have yet to find a seller who looks upon request for personal property with a favorable eye.
- Be willing to waive your inspection contingency! If you do this, it will be clear to the seller that you are making a serious offer and have serious intent to purchase the home. This is the last resort move, however, it is a doozy if you have confidence that the property is in good condition or you can handle whatever problems you uncover.
- Use a local lender that has a good reputation! Accepting an offer where the lender is local will sure make the seller and their realtor feel better about the chances of seeing the closing table.
These are several techniques to help you up your game in this increasingly more competitive real estate market. Notice that none of these are high dollar techniques or anything really fancy, but I promise they can make a difference. If you combine 2, 3 or 4 of these techniques in the same offer you will probably have an unbeatable combination. Remember sometimes it takes a little courage, faith, and risk to get what you want so don’t let fear or hesitation hold you back from making things happen. When you craft your offer with your agent, look at it through the eyes of a seller, be willing to think outside of the box and create a win/win for both parties and I bet you have a new home in no time at all. I’ll bet the next time you submit an offer, it will be FUN! Good luck.
The Kimbrough Team