How to Make the Best Offer When There are Multiple Offers on the Table for Your Dream Home
The real estate market is moving very quickly in Summit County. A lack of inventory has pushed prices higher and has created a challenging environment for buyers who are often up against multiple offers for the same property. As we are seeing more buyers than properties, we’ve also seen that multiple offers are presenting themselves more often than not.
Putting together a great offer is the most important step you’ll take towards buying a home. It’s what decides whether you’ll be becoming a homeowner or going back to the drawing board and trying again. Here are a few things to consider when making an offer on the home of your dreams:
Work with an agent who knows the market
Working with a real estate agent who is experienced and who is an expert in the market is a crucial factor in determining whether you will be on the winning or losing end of a multiple offer situation. It’s important that the agent you work with knows what’s happening in the market: Are seller’s underpricing to encourage multiple offers? What are similar properties in the area selling for? Are the seller’s over asking price? Having an agent that knows the answers to these questions is a sign you’re working with the right person.
Come in strong, upfront
Come in strong from the very beginning. If the property is priced well and is expecting multiple offers, you may not want to risk having the seller disregard your offer immediately for not being a serious contender. One of the most important factors, when a seller is considering multiple offers, is their belief that the chosen buyer is serious about buying the property, and that they have the ability to meet the terms and close the sale. One of the best ways to do this is to come in strong right from the start.
Earnest Money deposit
An important consideration when submitting an offer is the size of the earnest money. This is the sum of cash the buyer is offering to pay when the sales agreement is signed to show the person is serious about buying a home. The higher the earnest money, the better the offer. Look at it this way- your earnest money is going to your down payment anyway.
The next best thing to cash: a pre-approval letter
The pre-approval letter pretty much turns you into a virtual cash buyer. Yes, other buyers could still put in a higher offer, but if they aren’t pre-approved, you may have a leg up on them — even at a slightly lower price. Having a pre-approval letter is a no-brainer in demonstrating to the seller that you’re a qualified buyer and you’ve taken the time to get approved for a mortgage.
Come in Clean with as Few Contingencies as Possible
Don’t include unnecessary contingencies. Contingencies are negotiating tools that give you an opportunity to walk away without consequence. The most common contingencies are the inspection, financing, and the appraisal, and these are the most important contingencies to have in order to protect yourself. Home inspection contingencies are for the buyers' benefit and give you the right to have the home professionally inspected and request repairs by a certain date. If you’re planning on buying your home using a mortgage, the financing contingency protects you in the event that your lender doesn’t approve your mortgage. Buyers generally have about 21 days to obtain mortgage approval. For a mortgage lender to approve a buyer’s loan, the home must pass appraisal. The appraisal goes hand-in-hand with the financing contingency and verifies that the home is worth at least enough money to cover the price of the mortgage. The buyer is responsible for paying the appraisal, which typically takes place within 14 days of the sales contract being signed. These contingencies are pretty standard for most real estate contracts. Contracts with fewer contingencies are more likely to reach closing and in a timely fashion. Having a contract with fewer contingencies means there are essentially fewer ways for the deal to fall through.
Find out what’s important to the seller
It might be as simple as a quick closing that seals that deal- give it to them! If your real estate agent talks to the seller’s agent to understand what those hot points might be, you might uncover some easy things you can do to sweeten the deal for the seller. For example: allowing the seller to maintain possession of the property for a few days after closing, would be something small and thoughtful that would definitely not go unnoticed by the seller.
The highest offer won’t always get you the house
There are other factors! You can’t deny the emotional investment of some residential real estate. Taking into account that the seller may have childhood memories in that home or other types of personal connections, you should consider adding a personal touch to the offer. Taking the time to write a thoughtful note explaining your genuine interest and that it’ll be in good hands with you as the buyer, shows your dedication to the purchase. It ensures the seller that you are a serious buyer and may be just the edge you need to stick out from other interested buyers.
Don’t just assume your offer will be the best, work with an agent that will help you to make it the best. As you can see, there’s a lot that can happen when more than one buyer is interested in a home. An experienced agent, who you trust, can help to determine appropriate value based on the current market trends and can assist in negotiations and advice throughout the process. Working with a trusted realtor who goes above and beyond for their clients is crucial, and I would be happy to put my 20+ years of experience and dedication to work for you.
Let’s connect to discuss in more detail, JLeopold@slifersummit.com