If you aren't buying a home in the lower price ranges you may be asking…multiple offers? In this market? If you are looking for a home under $150,000 you know that mulitple offers are the current norm. It's not surprising when you look at supply and demand. The supply of homes under $120K is up 8.6% over last year…but sales are up 182%!!! It's a little better in the $120K - $150K range, but not much…supply has decreased by 12% and sales have increased by 60%!!
So…if you are looking in those price ranges there is a very good chance you will be competing with other buyers. I had sellers who reviewed six offers on a property this week, and most agents told me their buyers had already lost out on several other offers.
Bottom line price is usually the driving factor in getting the winning bid, but it is not uncommon that there is more than one offer at about the same price. Then it comes down to other factors, and there are many times where I have been called when representing buyers (or I have been doing the calling when representing sellers)…and have been told they have another offer(s) higher in price but they like other things in our offer better…if we raise the price to $xxxx, ours will be the winning offer.
No guarantees, every situtation is different, but here are some tips that could help you get the winning bid…
OFFER YOUR HIGHEST AND BEST PRICE
Making a multiple offer is different from making a single offer, where you start low and negotiate up. Don't get carried away and go beyond what you can afford, but make your offer high enough that you won't regret not having offered more if you lose it and won't regret having offered as much as you did if yours is the winning bid. The winning bid usually yields a net price over list price, sometimes significantly over.
MINIMIZE SELLER PAID CLOSING COSTS
If you don't need the seller to pay closing costs it can make your offer stronger without them. Most buyers in this price range ask for seller paid closing costs so it often doesn't make a difference. But if you don't ask for closing costs and the rest do, it can make your offer stand out. Also, in the current atmosphere of downward pressure on appraised values it can feel safer for the seller to accept an offer that nets the same amount with a lower sale price.
SUBMIT HIGHER THAN THE MINIMUM EARNEST MONEY
Your earnest money is part of your down payment and you only lose it if you back out of closing once inspection and financing contingencies have been met. Sellers are sometimes afraid buyers may back out, perhaps even more so with offers that are significantly above list price. Submitting earnest money in an amount over normal limits shows you are serious about closing. It is not uncommon for banks to require non-refundable earnest money of 2-3% of the purchase price on foreclosure properties.
KEEP YOUR OFFER AS CLEAN AS POSSIBLE
Avoid adding little things to the purchase agreement…fixing things, having the seller remove items from the property, paying for work orders, etc. Obviously, your offer should not be contingent upon the sale of another property, but in this market shouldn't be contingent upon the closing of another property either. Sometimes buyers don't include an inspection contingency, which can have a positive impact when dealing with 'real people' (not banks). Foreclosures usually include an inspection period whether you ask for it or not, so it doesn't have an impact there. I usually advise against skipping the inspection, it is too big an investment to enter into blindly…but there are times when it makes sense depending on circumstances.
PROPOSE A CLOSING DATE TO MATCH THE SITUATION
If the property is vacant, select a quick closing date as soon as your lender can have your package ready. If a bank is involved, allow another 1-2 weeks cushion. If the property is occupied and the seller must find another home first, allow a little more time and rather than asking for immediate possession, give them another day or two to move out after closing. (If they are buying their new home the same day after selling their 'old' one, they won't be able to move in until after closing.) Offering flexibility in the closing date can also be a positive factor.
USE A REPUTABLE LENDER
Now, more than ever, using a reputable lender can be an important part of having your offer accepted. If agents have had previous difficulties with appraisals or other closing issues with a particular company they may be hesitant to accept an offer from that company if they have other choices. If agents and closers have not heard of a company or if the lender does not have a good reputation, they may wonder if your offer will make it to closing. If you are using a broker, using a direct-endorsement lender that does their own in-house underwriting and has their own appraisal pool can be a positive factor in your favor.
MAKE A PERSONAL CONNECTION
In foreclosure situations banks are ultimately concerned with the bottom line and don't really care about making a personal connection, but if other factors are equal they may look more favorably on a buyer who plans to live in the property over an investor. If you are dealing with an estate or family home, there is usually an emotional attachment. Explaining something about yourself, why you love the home and deserve to be chosen as the winning offer can sometimes have an impact.
MAKE YOUR OFFER AS COMPLETE AS POSSIBLE
Make sure everything is signed where it should be, and that all forms are included (check supplements and agent remarks). While this typically won't make or break an offer, it sets the tone for a smooth transaction and if other factors are equal it can be a deciding factor.
Sharlene Hensrud, RE/MAX Results – Email – HomesMSP.com
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