Multiple Offers on the Same House at the Same Time

[Robert Fisher]

I had about 4-5 hours of travel in the car today, so I don't remember which podcast (of the 4-5 I listened to between the OG Pod and the Money Pod) this concept came from exactly, so forgive me for not posting under a show discussion.

But the concept of making multiple offers on the same property at the same time was something I hadn't heard of before.  It really jumped out to me because my wife and I are going to look at a potential new personal home.  The owner has had some health issues and has let the place get rundown in general but also by tenants.  But the place has serious potential and even has a separate in-law suite in the basement that could be a 1 bed apartment or Airbnb so we can get in on house hacking mania.  I mean it is a diamond in the ROUGH.  Deep rough.

The owner currently has it as for sale by owner and told our agent that he will probably list with an agent have his tenants move out next week and he does some paint and other little fixes.  I'm hoping to cut him off at the pass (assuming we like it enough to make an offer) and take that piece off his plate as more motivation.

I say all that to ask this:  While the podcast mentioned this strategy, I don't remember them giving any examples.  What are some potential ways you could make multiple offers on the same piece?  This idea jumped out to me because I was debating between offering X amount and taking we will take it as is with faster close or offering Y, with full inspection and longer close.  Now I'm thinking, why not both?  

Has anybody else done this or have any advice on how to structure these types of multiple offers?

[Chris Mason]

Originally posted by @Robert Fisher:

I had about 4-5 hours of travel in the car today, so I don't remember which podcast (of the 4-5 I listened to between the OG Pod and the Money Pod) this concept came from exactly, so forgive me for not posting under a show discussion.

But the concept of making multiple offers on the same property at the same time was something I hadn't heard of before.  It really jumped out to me because my wife and I are going to look at a potential new personal home.  The owner has had some health issues and has let the place get rundown in general but also by tenants.  But the place has serious potential and even has a separate in-law suite in the basement that could be a 1 bed apartment or Airbnb so we can get in on house hacking mania.  I mean it is a diamond in the ROUGH.  Deep rough.

The owner currently has it as for sale by owner and told our agent that he will probably list with an agent have his tenants move out next week and he does some paint and other little fixes.  I'm hoping to cut him off at the pass (assuming we like it enough to make an offer) and take that piece off his plate as more motivation.

I say all that to ask this:  While the podcast mentioned this strategy, I don't remember them giving any examples.  What are some potential ways you could make multiple offers on the same piece?  This idea jumped out to me because I was debating between offering X amount and taking we will take it as is with faster close or offering Y, with full inspection and longer close.  Now I'm thinking, why not both?  

Has anybody else done this or have any advice on how to structure these types of multiple offers?

Let's say you have a seller that says he wants the world: top dollar, fastest close, no negotiations over the condition of the property. You might come back and say, "I understand where you are coming from, but the home's value to me is dependent on how you would prefer I purchase it. I'm very flexible, we can pick the solution that works best for you." So maybe, to me, the home is worth...

• $400k if you want me to close it in 10 days using hard money.
• $425k to $475k if you work on some seller financing terms we can both agree to, closing at your leisure. Price will depend on the terms we work out. 
• $500k if you give me the normal amount of time to get a normal mortgage.
• $525k if you give me twice as long as the normal mortgage process normally takes, so I can get a renovation loan.

Maybe the ballpark market value of the home is in the $500k to $550k range. These are all propositions where you win. Hard money sucks, for example, but if you're getting 20%+ off the sticker price then who cares (& people sometimes forget that you can rate/term refinance out of HML into a Fannie loan with zero seasoning).

When wine menus have 4 reds at 4 price points, most people don't get the most expensive or cheap one. They get one of the two in the middle. So odds are in this case you'd either do seller financing, or a normal mortgage. But you don't really care what wine they pick, you price them all so you're happy with the numbers, and let them pick which one they are most happy with so everyone wins.

Of course my examples focus on the financing since I'm a mortgage guy, but that doesn't have to be what differentiates your offers. Anything you might otherwise negotiate, you can "pre-negotiate" to 3 or 4 different negotiation outcomes that you'd be happy with, and let the seller pick the one that makes them happy. The important thing is that, ideally, the seller is shopping your multiple offers, rather than offers from other people.

This is one approach. But a lot of times the best move is just for the  buyer's agent to hit up the listing agent and find the seller's pain points, and customize the offer to that. So it's a tool for the tool box, not the be all end all.