So your put in an offer on a home, expecting to play hardball and all of a sudden you find out your in a multiple offer situation, its time to put your game face on. Homes in popular neighborhoods are still facing stiff competition, and quite often multiple buyers are competing over the same house. In August 2013, 60.5% of offers written by RE/MAX agents across the country faced bidding wars. Tight inventory conditions and relatively low mortgage rates mean that multiple offer situations are still a reality. When you find yourself faced with this situation here are a few tips to make your offer stand out.
If you’re looking for a home in a sought-after neighborhood, be aware that a winning offer will likely be at or above asking price. This knowledge will help you construct a competitive offer at the outset that is still within your comfort zone. In early 2013, many buyers waived inspection and financing contingencies in an effort to win the bid. This approach can be effective, but it can also be an uncomfortable level of risk for some buyers. Knowing what you’re willing to do in advance will make it easier to make decisions when the timing demands it.
Prepare your financing
Whether you’re planning to get a mortgage or are paying in cash, make sure you have financial documentation ready to send. If you’re getting a mortgage, you’ll need a pre-approval letter. Being pre-qualified doesn’t cut it, since it doesn’t formally verify your income, assets and credit. If you’re paying in cash, be ready to submit proof of funds, which can be an original bank statement, open equity line of credit, copy of a money market account balance, or certified financial statement. Pre-approval or proof of funds need to be available at a moment’s notice and are expected, not optional. In addition, offering earnest money (often 1-3% of the purchase price) is another signal to the seller that you’re serious, so think about how much you’re willing to pledge.
Do a pre-inspection
In the past, inspections typically happened right after a seller accepted a buyer’s offer. However, the rise of bidding wars prompted savvy buyers to schedule inspections before placing an offer, giving them more knowledge about the home and making it easier to waive inspection contingencies. Doing a pre-inspection can put you ahead of other buyers by removing complexity from your offer, and also shows a seller that you mean business.
Selling a home can be a whirlwind. Any flexibility a buyer can offer a seller has the potential to reward them. Being lenient on closing or possession dates might make an offer more palatable to a seller in the midst of one of life’s most stressful times; moving.
Though it isn’t standard practice in every market, personal notes from potential buyers can humanize a transaction and tip the scales in your favor. The Reeves Team has seen several instances where offers were accepted based on the letter, even though they weren’t the highest. This works particularly well if the sellers are attached to their home, but not always so well for estates, where family members may have competing priorities and be less emotionally attached to the home.
If you’re anticipating a multiple offer situation, be sure to discuss your strategy and the risks involved with your real estate agent. With the right attitude and approach, you can get the house you’re looking for. For more information on how to navigate a multiple offer situation contact The Reeves Team.