As consumers, we consider competition to be a good thing. Competition keep prices down and innovation high. However, real state does not follow the traditional rules and laws of business. For example, unlike buying a car, you don’t have the option to find the perfect home just in a different color. Unfortunately, many times your perfect home is also someone else’s perfect home. This is commonly known as multiple-offer situation.
Being involved in a multiple-offer situation isn’t fun, but being prepared will greatly increase your chances of winning the bidding war and getting the home of your dreams.
- Have your pre-approval ready- Any home search should first start with getting pre-approved for a mortgage. Submitting the pre-approval letter with the offer shows the seller that you are a ready, willing, and able buyer.
- Write the perfect offer- The goal in a perfect offer is to make it as frictionless as possible for the seller. Ensuring that every T is crossed, I is dotted, and information is correct is the key to avoid having the seller draft a counter offer. Clean offers win houses.
- Remove unneeded contingencies- In my experience, contingencies have killed more deals than purchase price. Contingencies are a part of every offer to purchase and I would never advocate omission of inspection contingency. However not all commonly used contingencies are necessary. For example, removing the sale of property contingency might give you the competitive advantage needed over the other offers to win the home.
- Be flexible on closing date- Allowing the seller to set the closing date for what works best for them indicates that you see this transaction as a collaboration. And as the transaction progresses, you will be reasonable with your demands.
- Increase the earnest money amount- By putting down a larger than normal earnest money amount, you’re signalling your seriousness. Remember, this money doesn’t go to the seller’s pocket at the time of the offer. Earnest money is held in a trust account and the reduces the amount of money you bring to closing
- Raise the offer amount- Now is not the time to find the deal of the century. The seller is well aware that they have the leverage in the transaction and so should you.
With current inventory levels being so low multi-offer situations have become more commonplace. By doing your homework and following a couple simple guidelines you’ll win the bidding war and the home of your dreams. Happy housing from your favorite Realtor.
