A seller's most incredible, wildest dream – best scenario when selling a home - is to have multiple buyers compete to buy their home. This may not be something many buyers prepare for and it can derail their intent and hope to finally lay claim to a home they love when they finally find that perfect property.
Multiple offers are a sign of an increasing/upward price momentum marketplace. When two or more buyers see the same value or opportunity in a given home, the seller gets the benefit of considering everyone’s offer before deciding to accept any one.
Obviously, as with most competitive situations, there’s going to be just one winner and many frustrated folks who will continue to look for another home. So I thought it might be helpful for any home buyer to know how they can best compete and/or win if they find themselves in this sort of situation. Here are 7 proven strategies you can use to your advantage, or at least know that they exist and that you may be competing against any one or a combination of them.
- Be pre-qualified by a lender before shopping! By being pre-qualified you’ll know that there’s a lender already willing to support your purchase and whatever price level you’re willing to consider. By doing so, you can more comfortably and confidently remove a financing condition if you need or want to.
- Get rid of any unnecessary conditions. The more conditions you have, the harder it will be for the seller to get to SOLD by accepting your offer. In a competitive situation conditions are deal killers so if you can eliminate any or all of your conditions you’re giving yourself a distinct advantage over other ‘conditional’ offers. BEWARE, that if you decide to not do a home inspection you are assuming the property in its current condition. So any small surprises are yours to sort out; but as an informed buyer consider the downside. A new furnace will cost $5000 (roughly), and new hot water tank might cost $2500, a new roof (depending on size and structure) might cost less than $10,000. So you’ll need to consider what the potential downside is, and be ready to assume those expenses. If you suspect a problem, ask! Your agent may have some ideas on how you can get a bit more information to help you make an informed decision about doing this.
- Don’t include any holdback to the sale proceeds. If there’s a messy yard or garage full of garbage, some buyers may request to hold back a sum of money (say $5000 or so) to ensure that the garbage is cleaned out before possession. Here again, the seller will see this as an obstacle to getting all of his money so that makes him less likely to accept your offer over one that doesn’t contain a holdback.
- Tell the seller about yourself and your situation. Most sellers love their home or have some sort of connection to the property they are selling. If they see you as being the type of buyer that will love what they’ve started; or if they see a little of themselves in you then most sellers are more likely to deal with you (by accepting your offer) over someone who doesn’t share that connection – providing all else is similar. If you’re unable to meet the seller before an offer is accepted ask if you can include a hand-written letter.
- Let the seller select the closing date. Many sellers will find it to their advantage if you let them select a possession date. This may or may not work with you and perhaps when using this tool, you may want to specify a window such as “seller may select any closing day in August, 2014” written as a term in our offer.
- Offer more money! Most sellers are more concerned about the final sale price, and will often accept an offer that has the most money offered. If considering this strategy, ask yourself this question: If the asking price was $10,000 more, or $20,000 more would you still be interested? If so, what would be your offer then? Make an offer for an amount of money that you’re comfortable with and if you don’t get it, you know that it was more than what you were willing to pay.
- Offer to pay $1000 more than any other offer. I personally dislike this strategy but it does work with some sellers. In my opinion I think this is a bit greasy, because it’s really unfair to other buyers. As a listing agent I often see sellers scoff at this kind of offer and simply dismiss it. They tend (most often) to accept the one with the highest (real) purchase price on the offer.
Good luck out there!