How to win in multiple offers
If you're homebuyer thinking of entering the market this spring to purchase a home there a lot of things you can do to prepare yourself before you start looking. Aside from getting a preapproval from a loan officer and figuring out where you want to live you also want to take time to learn about what the market is doing. I can tell you that we have seen the market in a very short period of time go from a buyers market to a sellers market. It feels like overnight although it wasn't quite that fast. Now that the market is shifted were starting to see more and more multiple offers on properties. The reason being is that there are more buyers out there than there are listings. So one of the things you want to learn is how to win in a multiple offer situation if you find yourself in one on a home that you fall in love with.
Who's your lender?
This alone could make or break the deal. You want to stay with a local lender that is here to answer questions and will meet with you face-to-face. Avoid Internet lenders and out-of-state lenders they will only prove to be problematic for you from my experience. The sellers want to work with a buyer who has solid financing. How better to show them that you are a solid buyer than to work with an institution that has a great local reputation. Plus many times the listing agent for the seller will call that loan officer to verify information on the letter and you want to make sure that you have somebody in your corner that can take that phone call and answer the questions.
Don't play games, make your best offer first!
If you really want to buy the home why would you try to lowball the seller? Those days are over and the homes that are priced properly are selling sometimes in less than a day. If you make your best offer your first offer you've done everything you can to tip things in your favor. If you find yourself in a multiple offer situation and they come back at highest and best you won't get sucked into a situation where at the end of the day you feel like you may have overpaid for the house. There is no way of knowing what the other offers are so they could be playing one against another over a couple of thousand dollars or less yet some people end up raising their offer by tens of thousands of dollars when they didn't have to. Know the market, know your area and know the per square foot price that the recent sold have been getting. This information will be provided to you by your agent to help you determine what your offer will be.
How big is your earnest money check?
Banks view this when you're purchasing a foreclosure as a really important piece of the offer. They view it that the bigger the earnest check the more serious and better the buyer is. Up until recently this was in as important to traditional sellers as it is now become. The earnest money is a credit to you at closing so you can beat out another buyer sometimes by simply writing a larger earnest check. When a seller has three offers in front of them that are almost identical they will start to look at the small differences to try to make a decision. This is why the earnest check and the lender becomes so important.
Do you really need those closing costs?
If you don't then pay them yourself! Most of your competition will be asking for seller paid closing costs because they need them to make the deal work. There's nothing wrong with that but if you're in a position financially where you can pay her own closing costs it could give you another competitive edge over your competition. It's one less fee that the seller has to pay and the upside to you as the buyer is not rolled into your mortgage so you won't be paying interest on that money over the life of the loan.
What are you waiting for?
If you like the house, write an offer! This is not the real estate market of a year ago. There is no longer an opportunity for you to sit back and wait for a week or two to make a decision about a house. Sometimes by presenting your offer right away you show a seller that you're very serious and want to buy the house. Not every seller wants to get into multiple offers or keep their home on the market any longer than they have to. If you bring a reasonable offer to them you stand a pretty good chance that they will work directly with you to try to come to an agreement and you may be able to avoid multiple offers completely.
The market has changed and he was a buyer have to change with it. If you don't embrace some new strategies you will find very quickly that all you will do is end up writing one purchase agreement after another. You won't actually get a house you'll just be writing purchase agreements. This is a very competitive market so you need to do everything you can to put yourself in a position to win.
Tom Sommers is a Hopkins real estate agent
Tom Sommers is a Hopkins Realtor