How to WIN in an "multiple offer" situation.

[Cynthia Elder]

Investor: Good morning and happy investing everyone! I have recently been running into several "multiple offer" situations and have been losing out on some great deals. Anyone have any advice on how I should handle this?

Cynthia Elder - Real Estate Agent: Hi Investor, I have a few clients that have been running into the same issue. Whenever we ask how many offers the seller has received the resounding answer is typically three and the property has only been on the market a few hours.

Investor: I've heard this too. That they have multiple offers, repeatedly. So much so I feel that they may be bluffing just to get me to offer more money. How do we verify that this is true?

Cynthia Elder - Real Estate Agent: In a competitive fast moving market you may run the risk of losing out on a deal by waiting for verification of the other offers. In most cases they won't choose to provide you with this. They typically, do not have to, unless you're requesting an escalation clause with your offer. In this case, you would ask for proof of the highest offer that they used to escalate your offer.

Investor: I haven't done an escalation clause before. What is it?

Cynthia Elder - Real Estate Agent: Its a tool you can use when you want to win an offer but don't want to pay more than a certain amount. This is something you can use when you want to offer top dollar but don't want to pay way above what others are offering. However, I will tell you the benefits and downfalls of this strategy. The benefit is that you win an offer by outbidding your fellow man, while not overpaying by an extravagant amount. The downfall of it can be two-fold you can offer more than the home appraises for and may have to come out of pocket for the difference. Also, some sellers don't like the extra thought that has to go into accepting your offer over another. They prefer to deal with exact numbers, exact close dates, and exact uncomplicated ways of financing the purchase of their home.

Investor: So what do you think is the best strategy when dealing a "multiple offer" situation?

Cynthia Elder - Real Estate Agent: I think the best strategy is to make your offer as simple to understand as possible. Give your highest and best purchase price, exact close date, waive or modify the inspection contingency, and the simplest form of financing available to you. Having some cash in the game doesn't hurt either.