You’ve saved and saved and are ready to buy your next home. You’ve scouted several homes with your Realtor® and you have found THE ONE. It’s been on the market for six months and you start thinking this house has been neglected – but why? After a thorough review of current market data you submit a solid offer that day. The next morning your agent calls to tell you there are now multiple offers and the seller is instructing agents for “highest and best” within 48-hours and the seller will review all offers then. The home you dreamt about where you’d put the sofa, the kids toys and room for your skis in the garage feels like it’s slipping away. Your head starts pounding, your heart races and the cortisone is making itself known throughout your body. Hopefully your agent has counseled you about the 60 percent chance of this happening. I have experienced this so many times but when it happens to you it can feel like an incredible stroke of bad luck. How can the home you chose after it’s been on the market for months and months now have multiple offers? All is not lost, yet now you must step up your game if you did not submit the best offer. There are many ways a seller can handle multiple offers. Sometimes sellers price their homes under market value to procure multiple offers. Other sellers price accordingly, obtain more than one offer at a time and consider the first offer submitted and negotiate in that order. I have heard of other sellers rejecting all offers and request every buyer resubmit. This is a high-risk choice that I do not recommend as some buyers will walk away sensing that future negotiations will be one-sided and it’s quite a slamin-the-face experience. If you find yourself in a multiple offer situation, work with your agent on submitting the strongest offer you can — right then. Now is not the time to see if this is a really happening. Holding back by trying to keep “a little bit more” to negotiate could result in losing the house. Some buyers have lost homes over a very miniscule dollar amount — less than one-half of one percent of the sales price. Tough call to make, right? It’s tough because after all the research and reading you may have done online is not working in your favor at this moment. I relate it to the birthing plan you put into place while awaiting the birth of your child. They’ll come no matter what time you wrote on the calendar. NOW is the time to put your best offer forward. Here are some tips on strengthening your offer:
Put a large earnest money deposit down. A seller will take your offer more seriously with a larger deposit. Your offer likely has other standard contingencies that protect all parties throughout the escrow period so if it seems like it is a large amount of earnest money, it is protected up to the point of you removing all said contingencies.
Write a letter to the seller. Let’s face it — real estate is a fairly emotional transaction with a few exceptions (i.e. new construction, bank-owned). Write a short letter to the seller/owner touching on two or three reasons why their home is perfect for you and your family. I have had several multiple-offer situations this past year and the buyers who have submitted letters have been more successful than not.
Shorten or waive some contingencies. This options requires careful review; however, if you are confident that the property could skip the inspection, you can decide to waive it — or shorten the timeframe requested to obtain a property inspection. I always recommend a property inspection so this suggestion doesn’t come lightly.
Work with the seller on possession. If the owner is being relocated and must sell before they can buy, offer a one to two month rent-back for them to stay in their home while they look for their replacement property. The rent-back could even be at no-charge. Your first house payment usually begins one to two months after you close. Spending a few thousand dollars remaining in your rental could be worth it in the grand scheme of things. Use that time to go through your things, eliminate clutter in your current residence and you’ll have time to move out without feeling rushed.
Escalation Clause. These were used quite often during the last real estate rush. An escalation clause essentially says you’ll pay a set amount above the highest offer submitted to the seller with a disclosed cap of the maximum you would pay. Offers to sellers are confidential to other buyers but of course the seller sees them all. If the seller hot button is getting highest price possible, an escalation clause could be helpful. Your buyer’s agent will keep you posted, hopefully on a daily basis, while you are in this potentially stressful situation. Potentially? It IS stressful! Patience and communication is greatly appreciated by all parties. You may not be the winning home buyer, but if you do not submit an offer you do not stand a chance of winning.
Remember that sometimes offers are not all about price. I have had sellers accept lower offers in multiple offer situations because the offer is just better. If you do not succeed the first time, hang in there. There is always another home that will come on the market that is as good, if not better, than the one you initially fell in love with. Going through the experience is no doubt an emotional roller coaster yet your agent is there to help you understand the process and keep you informed.