Multiple Offers – The Best Strategies

In many of the stronger real estate markets in the country we are seeing an influx of multiple offer transactions.   This is how it usually goes.  You have been house hunting for weeks and you notice one home has been for sale for five months without any offers. You figure that the home must be overpriced but you go look at it anyway. You fall in love with the home.  It's the perfect home for you, and you figure you can get a great price because the seller is must be desperate for an offer by now.  You write an offer on it and then your Realtor delivers the offer to the seller’s agent. That night all you do is dream about the home thinking about how you will arrange your furniture and which colors you will paint the rooms. The very next morning your agent calls to say the house has been sold to somebody else.

How is this possible? You're surprised, angry and depressed. You wonder if the seller had a buyer in his back pocket all along. Did you get deceived? You were not. What generally happens, and no one can seem to explain why, is the minute you want to buy a home, so do three other people. It's common for the seller of an overpriced, dated and neglected listing to suddenly receive two, three offers, all on the same day.

A great tip from and : When you the right home to buy, write your offer immediately. Ask your agent to call the seller's agent to find out if whether or not anybody else might be writing an offer.

Handling Multiple Offers in Seller's Markets

Many times home buyers wonder if it's worth trying to compete against other buyers when sellers market conditions exist.  When there is very little inventory on the market, it's not unusual for a seller to receive a half dozen offers. It's always a good idea to write an offer anyway. Here are tips from to make your purchase offer outshine the rest:

• Write Your Very Best Offer.

Don't put yourself in a negotiation situation from the start. Offer your highest price and make it attractive, maybe a bit above list price. Ask your Realtor for a CMA on the home to determine its value. Sometimes sellers deliberately set a price below comparable sales in an effort to generate multiple offers, so paying a little extra doesn't necessarily mean you are paying over the home’s value.

• Attach a Large Earnest Money Deposit.

Pending home sales can fall apart.  Many sellers are worried that once they commit to an offer, the buyers may back out of the transaction after all the other buyers have disappeared. The earnest money deposit is part of your down payment. By increasing the deposit above the norm, you are showing the seller you are serious about closing this transacting. You're only offering the seller a little more money a little sooner but it speaks volumes.

• Prove to the Sellers You Are Qualified.

Almost every offer in a multiple offer situation will be accompanied by a lender letter. To stand out, ask your lender for a mortgage pre-approval letter, which is different than a prequalified letter. Being preapproved makes you a stronger buyer.

• Give the Sellers Enough Time to Move.

Possession is often a point of contention. It's hard juggle dual closings if you are selling and buying a home at the same time, and even more difficult if the sellers are doing the same. Give the sellers some slack by giving them two to three days to move out after closing, without expecting any compensation.

• Shorten or Waive Some Contingencies.

Always get a home inspection, but tighten up on the time period. If your loan is solid, waive the loan approval contingency. Talk to your agent about comparable sales to decide if you want to waive the appraisal contingency.

Multiple Offers in Buyer's Markets

In a buyer’s market, the winning offer in a multiple offer situation is many times less than listing price. The number of multiple offers are generally considerably fewer, meaning you might be competing against one or two buyers not 10-15.  Below are suggestions for competing:

• Find Out What Things Are Important to the Seller.

These could be seller requests or listing agent expectations.  Ask what will seal the deal and then give it to them. Maybe it's a fast closing. Maybe it's a longer than usual escrow period.

• Sell Your Existing Home First.

If you have a home to sell, don't buy your next home without selling your existing room first. If you're a first time buyer, you may already have the advantage over a buyer who needs to sell before buying. If one offer contains a home sale contingency, the seller will be attracted to the offer without a contingency to sell.

• Be Nice.

Don't ask the seller to give you personal their items. Don't expect the seller to pay all your closing cost. Find out which charges are usually paid for by the seller and offer to pay a few such as escrow fees, title insurance policies, transfer fees, etc. Most sellers have an emotional attachment to their home and want to see it fall into the hands of an acceptable buyer. Be that acceptable buyer. Write the seller a brief letter explaining why you love the home and why you deserve to be chosen as the winning offer. .

• Prepare for a Counter Offer.

You can write your highest and best offer, and a competent listing agent is likely to still advise the seller to counter all the multiple offers, even in a buyer's market. The seller retains the right to choose or reject accepted multiple counter offers.