Buying a home in a sellers market?. While most Buyers dread being in a multiple-offer situation, with a little preparation Home Buyers can win a multiple offer situation without necessarily paying more money. To win that house you’ve been pining for, you’ll need a battle plan. Here are eight key steps to craft a winning scenario.
- Address the potential for a multiple-offer strategy right from the start
- Be readily available to view properties and react
- Insure a proper presentation
- Ensure you allow the right amount of time to keep the offers open
- Pre-Approval, not just Pre-Qualification
- Outflank the competition
- Don’t be afraid to ask
- Be prepared not to get the property
Address the potential for a multiple-offer strategy right from the start
When you initially meet with your Realtor, address the possibility of a multiple offer scenario on any property that you discover and understand your options. Here’s what you need to know:
First, you can enter the negotiation as if you are not competing. Second, if you really want the house and the value is apparent, you can offer close to list price with enticing terms. If you can’t live without this house and the list price is reasonable, then it’s smart to offer full price or somewhat above the asking price. The final option is to simply walk away if a competitive offer scenario ensues. Run through and discuss these scenario’s and determine how you will handle them if it were to occur without the pressure and emotion of the actual moment upon you. This will provide you a solid framework to reflect on in the heat of the moment, if and when it does occur.
Remember that while you are calling the shots in the negotiation (ie: it will be your house and it’s your decision as to how the offer should be negotiated) you can benefit a tremendous amount from the experience and advice of your Agent who has experienced buying a home in a sellers market numerous times.
Be readily available to view properties and react
This point really attempts to preclude a multiple offer situation, but it is so important that it’s worth mentioning. Make sure you are flexible to view homes at odd times or earlier in the day than most people are able and this will give you an advantage in being the first to view new listings. If you do spot a great home that you know is right then do not delay in offering. You can always add a condition to ensure you haven’t overlooked something but acting quickly could get you the home you want before the competition sees it, and may preclude a multiple offer situation from the outset, this is one of the most important key while buying a home in a sellers market.
Insure a proper presentation
Find out which other Agents have written offers so you know what you are competing with. Your Agent should know the experience and track record of these other Agents. If the Listing Agent has written one of the competing offers then common protocol often requires that the office manager (or other third party representative) be present during the multiple-offer presentation, to ensure the Listing Agent does not unduly favor the presentation of his own offer.
Ensure you allow the right amount of time to keep the offers open
Prior to the time you present your offer, ensure that your Realtor enquires about the time parameters required to present the offers. You want to ensure that you have enough time to properly respond while not encouraging yet further offers to enter the competition allowing the negotiation to drag out over a long period of time. Make sure that you are readily available to accept or counter the Sellers terms – this can make the difference and in some cases your Agent will ask you to wait in the car (or be nearby) while they are presenting your offer in case you need to make any last minute changes to get the deal.
Pre-Approval, not just Pre-Qualification
A good way to be prepared for a multiple-offer situation is to obtain a pre-approval letter from their lender. “Pre-approval” means that the lender has checked your credit and that you will be approved once the title work and the inspections are complete. A pre-qualification letter means that the lender has looked at the application but has not checked the borrowers’ credit. Consequently, you should try to obtain a pre-approval, over a pre-qualification letter. Make sure that you have this in your file and include it when you present your offer. Better yet, eliminate the financing condition altogether if you are confident in obtaining your financing – first be sure to consult with you Realtor and Mortgage Broker/Banker on the risks associated with doing so.
Outflank the competition
There are a number of ways that you can make your offer stronger than your competitors’ offers. First, you can allow the seller to select the closing date.
Another approach is to shorten the due diligence periods. In some circumstances, you may even eliminate the loan or inspection conditions entirely, (for example if you are tearing the home down) but be cautious in doing this and ensure that you consult with your Agent. Often Sellers will take an unconditional offer of less value than a higher offer that has conditions attached. Smart Sellers know that when the stars align and the have a multiple offer situation, this is the best situation they can expect and once everyone sober up from the party (and the property is longer on the market) they may not achieve nearly the same level of interest again.
Also try to be flexible about any special needs the seller may have, such as leasing back the property or taking something such as the big-screen TV that is currently attached to the property.
Don’t be afraid to ask
While there is no obligation for the Seller’s Agent to disclose what offers are on the table, don’t be shy about asking. You could ask, “What has the seller turned down?” Whether or not you receive a response is debatable. Many times, especially when their circumstances may have changed, sellers have ended up taking much less than what they turned down at an earlier date.
Be prepared not to get the property
No one likes losing a house that they want. In fact, some people can become quite upset especially when emotions are involved or you have been looking for some time. Understand that there will always be another property around the corner that comes available and sometimes it’s even better than the one you lost.
Multiple offers can be challenging, but if you will follow the simple guidelines above, you may be surprised how often you’re taking a closed transaction check to the bank. These suggestions just scrape the surface of the possibilities that multiple offer situations can offer. By far your best offense in these situations is to ensure that you have the best, most experienced Agent possible representing you. Since the markets which multiple offer situations flourish occur sporadically, having access to the broadest depth of experience possible will increase your opportunity for success.