Seven Ways to Win If There Are Multiple Offers
by Patty Donmoyer, Realtor ®
With historically low inventory, properties are getting multiple offers in the Northern Virginia area. As demand continues to surpass inventory, here are five tips to help your offer stand out from the competition!
1. Make a realistic offer.
It's really hard for some buyers to offer asking price or above – bargaining is in our genes! But if you're in a tight market – and the property is fairly priced – then come in with a realistic offer that makes you competitive. Don't let a few thousand dollars take you out of consideration.
2. Show them you're serious.
Clients and agents still debate the 'perfect' amount to put down, but when you're in a multiple offer situation, more money means you're more serious. If you were a seller and had to decide between two offers, one with $2,000 down and one with $20,000 down, which one would you take? Discuss the proper amount with your agent (the more you put down, the more you're at risk if the transaction goes awry), but put down enough to clearly convey that you mean business.
3. Go in with a reputable lender
While more financing options are generally considered a good thing for the housing market, the proliferation of lenders have led to some challenges for some buyers. Sellers (and their agents) are looking for solid financing with lenders they know and trust. Ask friends and talk to your agent in advance about who has a good reputation in your community – choose two or three, do your research, and find the right match. Make sure your offer is one in which the seller will have total confidence. Bonus tip: use a lender who has a local presence; being able to contact someone in person can make a difference. If your only lender contact is out-of-state (perhaps on a different time zone) or you’re not sure who is responsible for your file, you’re at risk if there are any last-minute changes as you head toward settlement.
4. Consider an information-only home inspection.
I do not encourage my clients to waive home inspections; they protect you on a number of fronts. But if there are multiple offers, then you may opt to do a pre-offer inspection or offer an information-only inspection. If you do an information-only inspection, you can still cancel the offer if you find something catastrophic (as long as it is within the home inspection deadline, set by your sales contract), but you have taken one of the most contentious parts of the home sales process off the table. If sellers know that they won’t have to negotiate on little things and perhaps pay for repairs (and that you’re going to do it quickly), they will be more likely to accept your offer. Bonus tip: You can also waive the radon test IF you are comfortable with doing the work yourself in the event the radon level measures above the federal acceptable standard of 4.0 pCi/L. Most radon remediation systems in the Northern Virginia area range from $900-$1,500, a small price to pay if waiving the test gives you an advantage in getting your offer accepted.
5. Be prepared to bridge the appraisal gap.
When there are multiple bids with escalation clauses, what happens if you offer more than the house appraises for? Be cautious, but don't panic. A lower appraisal could be due to any number of factors, including an appraiser not completely understanding the neighborhood and recent comps not keeping up with rising home values. Consider a clause that says (for example) "If property does not appraise, buyer will cover the difference up to $8,000." If bidding pushes the price of a home up, this will help protect you and give the seller peace of mind. Be careful, though – don't offer more than reason would dictate or more than your cash reserves can stand.
6. Write a cover letter.
It's human nature to want to work with someone you know and like – home sellers are no exception! Write a letter telling the seller a little bit about yourself, why you love the house, and why you think you're the best fit for the property. A sincere note with a few details may make the difference between losing the home and getting your offer accepted.
7. Give the sellers what they want.
While many buyers focus on price, smart agents know that terms are just as important – and if you don’t know what the sellers want, you can’t deliver. Ask your agent to ask…what’s ideal for the sellers? Many people say they’re flexible, and that can be true, but most people – when pressed – will admit that they have an ideal closing date, along with other needs, which could possibly include a rent-back, or other terms. Make sure your offer is absolutely perfect for the sellers, and you’ll have the advantage.