How to Win in Multiple Offers
Today we’re giving you our tips and tricks to win in a multiple offer situation. If you're a buyer this spring, multiple offers are commonplace and there aren't enough homes on the market to meet buyer demand.
Competing against other buyers to win a home will be a likely scenario. It's competitive! As realtors, we have some general tips that will help you be successful.
Know what you can afford.
You have to get pre-approved to avoid heartache in the home search process. In general, you need to know exactly what works for your budget in terms of monthly payment, not just total what you can qualify for, but how much you want to be paying on a monthly basis. You need to talk to a lender to be able to really wrap your head around that. Some of the things that can make you stand out here, if you're being put up against the other buyers in multiple offers situation is having a higher down payment. That is going to be attractive to a seller, because it shows you as a stronger financial suitor. So a conventional loan over an FHA, for example, is typically viewed by sellers as stronger financially due to the qualifications necessary for those kinds of loans.
Keep in mind, a lot of lenders offer what's called pre-underwriting, which can be a really great tool here. A lot of people have them under different names, but it basically means they have done the hard work of really digging deep into your background, verifying everything, and taking it through their process. Sellers love to hear that, because it reduces major risk on their end. Lots of lots of the unknowns are already answered.
We want to wrap up the budget portion of this conversation by encouraging you to consider looking below the top of your budget so that you have more flexibility to flex your muscles and write an offer that is over. If we're looking at houses that are at the tip top of your budget, you're not going to have any room to write a super competitive offer. Really do your research on what is reasonable for your budget and what the market is like.
For more insight on buying and selling at the same time check out Episode 32 for advice and Episode 36 to learn about a new program offered to individuals doing this.
Be prepared to act fast.
If you're touring a property, you should be prepared to make a fast decision, because in this market we do not have time. You need to be able to make a decision almost immediately, or at least that same day within a few hours, whether or not you want to move forward and write an offer on this property. So what that means is that you should be searching online with your agent and keeping your MLS portal updated so you can see the minute a home that fits your criteria goes on the market; your realtor will be your best teammate and partner here. They should be helping you find resources and letting you know what is normal for your budget. A good realtor is one of your greatest assets when it comes to asking quickly.
What we’re seeing with houses that go on the market expecting multiple offers they give time for people to get in the house and then set a deadline. This gives you time to discuss with your agent and figure out what your best foot forward is and put forth your final and best offer. Typically, that's all within about 48 hours. So if the House goes on the market Friday, we're seeing deadlines of either Saturday evening or maybe Sunday afternoon. You really only have an opportunity to see that house one time. They'll set the offer deadline and expect that every offer they have is final and best. It really comes into being prepared, knowing what neighborhoods you want, knowing which schools are important, what are the must haves, what are the deal breakers, and which houses you're really willing to fight for. If you know what you’re looking for, when you do find it, you’ll be ready to win.
Know what will help you win in specific situations.
Price is always going to be important. And so we are always going to look at the price. We're going to look at the comps for the house, what it's reasonably worth based on the market. But then there's also the conversation of what you're willing to pay for a house. Right. I always say I don't want you to overpay for a house without you knowing it. But in this market, there are a lot of people that are overpaying by choice because it's the right thing to do and prices are increasing like crazy in our area. And so those are just conversations that we should have with data, with knowledge and go into eyes wide open.
Your realtor should do a thorough job of researching the home and speaking with the agent. The more we know about the seller and about their specific situation, the better of an offer we can craft to their liking. At the end of the day it doesn’t just come down to price, the whole package matters. Don't underestimate a great realtor here, someone that's professional, someone who's quick and detailed with paperwork, someone who's kind and who is going to be good to work with you.Why that matters is if all of a sudden you're in a multiple offers situation. Where all four of your officers look generally the same, they're going to choose the one that looks like they're the most buttoned up and that's going to actually make the deal happen. So that's the reason that all of these factors really matter.
Put in a good word for yourself.
We recommend someone else putting a good word in for you, like a neighbor. They have a vested interest in who moves in there. Don't underestimate what may be the thing that gets your foot just past the finish line. And if there’s not a neighbor around to chat with you can always put in a good work for yourself by writing a love letter to the seller. If it's close enough, the seller may care a whole lot more about who's going to come live in this house that they have cared for for the past twenty years. We want to use every opportunity of leverage that we can, so we want to tell them how wonderful and amazing you are and see if we can pull at those heartstrings. It’s also important to note that it is no longer encouraged to put a photo of your family on that letter. We want to be careful from a discrimination standpoint and we're going to help you navigate that.
Keep in mind, if your offer isn't any good, your love letter doesn't matter. So it's absolutely helpful, but we need to know that the brass tacks, the paperwork, and the money part of the situation is squared away. This is the entire package of what it means to present you as a buyer, to present you as a lender. We've talked about that a lot in previous posts, how lenders can kind of give you a leg up or not depending on their reputations.
Take advantage of the option period.
One last point that I will do is that we have something called the option period here in Texas, which is a negotiated amount of time. As soon as all parties sign the contract that you have the unrestricted right to walk away to terminate the contract for any reason. Typically, it's going to be 5-10 days on the shorter side, because of these multiple offer situations. I will say that that is one of the best tools that we have in a market when you have to make a fast decision about something that is a huge choice. Our option period is also super cheap, it's typically $150-$250, that's all you would lose to get a few more days to really take a deep breath, evaluate the home, get some more information, get it inspected and see the home again. So you're always going to want to hold it loosely during the option period anyways in case there are things that you need to walk away from, but use the option period to your advantage.
We’re here to help you!
It's an honor to get to help buyers each and every day find their dream home, with these tips, you will reduce buyer's remorse, but go into your home search prepared and ready to win when you find the perfect home. If you're looking for a home this spring and need a great realtor on your side, please reach out. If you're selling a home in this market, go back and listen to Episode 20 where we give you all of our tips on how to drum up multiple offers.
We want to hear which topics interest you most for our upcoming posts, head on over to WhereWeLivepodcast.com to continue the conversation in our Facebook group, listen to our podcast, and connect with us.
Until next time,
Keelie & Brianna