Top 10 Tactics to Use to Win Multiple Offers
In this market, it goes without saying that you may have to offer over asking price.
However, there are other factors as well that a Seller will consider when deciding on which offer to take.
Are you thinking about purchasing a home and intimidated by stories from friends and family about making offers on 10 houses and still losing. Fear not because I am sharing 10 of my best tactics that work for winning the home of your dreams when there are multiple offers. Not all tactics are for everyone but pick and choose the ones that are best for you.
This is the strongest seller’s market on record, so sellers can choose the strongest offer possible. This means the highest price, with no repairs, no contingencies, no hassle and confidence that the buyer will close on time. With that being said, let’s talk about what it means to have the strongest offer.
The strongest offer is cash with no contingencies, short inspection period, and closing on the seller’s timeframe. 30-40% of homes are being purchased this way so you have to assume you may be competing with these offers.
The number 1 most important tactic is to be prepared to write a strong offer the same day a property goes on the market. To be prepared, you should: Have your finances in place. This means the cash if using all cash or have a pre approval, not just a pre qualification from a trusted lender that is known locally. Have all your inspectors ready to inspect quickly, typically within 2-5 days. Have your down payment, earnest money, inspection fees, and appraisal fees in the bank. Be ready to think outside the box.
Don't use a Financing Contingency
If you are purchasing with a loan as most buyers do, fear not. You can still win with tactic number 2. If you have a good lender and you are prepared and approved, make your offer without a financing contingency. This offer is just as good as cash.
Be prepared to pay over Appraisal
Tactic 3 is not to include an appraisal contingency. Include in your offer that you will pay the difference between appraisal and offer price. Most homes in multiple offers go above asking price and the seller wants to know that you will and can close with the offer you make. If you are limited on cash, we use a special stipulation that says you will only for X dollars over appraisal value and this may still keep you in the game. For example, you will only offer $5000 over appraisal.
Close on the Seller's Schedule
Having the closing date set on the Seller’s schedule or allow the seller possession rent free, say a week or 2 after closing is always a great tactic and is at number 4. The seller is often looking to meet a schedule, like closing on their new home, This often means the difference between the top two bids.
Use Conventional Loan When Possible
5. If you must have financing and appraisal contingencies, you need to be aware that sellers view certain loans as being less risky for them than others. Conventional loans are considered less risky, followed by FHA, USDA, and then VA. FHA, USDA and VA loans have stricter condition, repair and appraisal requirements and thus make them less attractive.
Use an Escalation Clause
6 is a great tactic to use sometimes to keep from over bidding is to use an escalation clause in your offer. To best describe this, an example would be to offer $1000 over the best offer up to a maximum price. If you have ever used eBay’s automatic bid, it works the same way.
Don't Make the Offer Contingent upon Closing Your Existing Home
Tactic 7 is don’t make your offer contingent upon your existing home closing. These types of offer are the first to be refused by a seller even if your offer is the highest because it doesn’t give the seller confidence that you can close on time or even close at all. If you must sell your home before you purchase, which is most of us, there are many strategies we use. Give me a call or stay tuned for my upcoming video blog on strategies to coordinate purchasing and selling.
Don't Ask For Anything
8. Don’t ask for anything! Sellers don’t want the hassle and competing bids are not asking. Each and everything you ask for such as that refrigerator, repair that leaky faucet, have the house professionally cleaned, or requiring a termite bond puts you further down the list. You want to make it as easy as possible for the Seller.
Write a "Love Letter"
You would be surprised how often number 9 works. Write a “From the Heart” Love letter about why this home is so special for you. Sellers have put a lot of effort into their home and they see their home as special and want the next owner to love it like they do. We often see sellers take an offer with a Love Letter over an equal or higher bid.
Think Outside the Box
Last but definitely not least at number 10. Don't be afraid to think outside the box. We have seen buyers pay for sellers moving expenses, giving them a timeshare week, Frequent Flyer points, renting back the home until they close on their home, and letting the seller store furniture in the basement temporarily.
It's Time to Start Your Search
If you're thinking about buying a home this spring, let's start your search. We'll do everything we can to get your offer accepted.