Have you put an offer on a home only to lose out because of multiple offers? The market is slowing we know, but, when a house is priced correctly there are still multiple offers! Especially as in Los Angeles were we have had very low inventory for the last five years there are still many very well qualified buyers out there! It is of course what every seller wants as it pushes the sales price to the maximum, but it really sucks for buyers!
I am going to give you 10 strategies that will help you win a multiple offer situation.
Offer the most competitive terms possible
Have your agent talk to the sellers agent to find out what the sellers priorities are, do they want a fast close? Or a short close with a lease back for example, is there anything specific the seller is looking for? Make sure these priorities are in your offer.
Loan, appraisal and physical inspections are the three most important time contingencies to the seller. These state how much time the buyer has to complete these items, buyers can back out of the purchase any time up until these times periods are up.
The seller only knows the sale is going to go through when all contingencies are dropped. So, it makes sense to have your contingencies as short as possible, and if you can come in without one or two of them, even better!
If you are competing with a cash buyer, making an offer with a loan can be less appealing to a seller.
All buyers are pre-qualified and have to provide that verification to the seller.
However if you can be pre-approved, that will be far more appealing, put pressure on your lender to work fast in order to finish the approval in as few days as possible.
I recently wrote an offer for a client with a seven day loan contingency, the listing agent called me up and didn’t believe it was possible, thought I was “bluffing” to win the deal, however, I convinced him how well qualified my client was, had him call the lender to assure and confirm that my buyer would be approved within that time frame.
We won the bid, and day seven released the loan contingency.
MORE AGGRESSIVE STRATEGY
Imagine if you could come in without a loan contingency? How appealing would that be to a seller? Being able to take twenty one days of nail biting waiting for the seller off the table completely, would be hugely attractive. If you want to be very aggressive because of very competitive multiple offers from other buyers, and your lender is able do all the verification and paperwork before making the offer you could write the offer without a loan contingency but still apply for the loan. This will make your offer extremely strong and able to compete with an all cash buyer
Talk to your lender to know if this is feasible.
All lenders require an appraisal, however you can still make an offer without the appraisal contingency. This is a buyer’s decision.
A buyer must be comfortable that if it does not appraise at the sales price, they will have to come up with the extra cash, between the appraised value and sales price. Your agent should educate you the buyer on the comps and so you can decide if it is something you are willing to do.
Sellers love this! It gives them the security that should the home not appraise they will still get the sales price. The biggest reason that all cash buyers often win multiple offers is because their offers have no loan or appraisal contingencies, making them very desirable buyers. The beauty here is, without these contingencies, buyers with loans are now able to compete with all cash buyers.
Do them as fast as possible! Always inspect the property. If the home is likely to get multiple offers, have your agent put an inspector on hold as soon as you think you may write an offer, they can always be cancelled.
A good agent will have several inspectors in their database and should be able to organize inspections to be done in as little as a few days. 3-7 days is really fast, but if any serious issues come up you request an extension, or cancel.
Again, if you want be very aggressive, there is another way in which you could make your offer… with no inspection contingency.
INSPECT THE PROPERTY BEFORE YOU SUBMIT AN OFFER!
Listing agents often give a time when offers are due, in 4 or 5 days time, sometimes in as much as a week or more. If you can, get an inspector in before you make your offer you will be way ahead of other buyers. Sellers then have the knowledge that you won’t grind them down later with a big request for repair or price reduction. How powerful is that?
MAKE YOUR PURCHASE PRICE OFFER STRONG
Do not low ball your offer! Your first offer should be strong. If there are several offers the seller may only respond to or counter offer the highest offers. You do not want to exclude yourself from getting a counter offer. And remember, if there are multiple offers you will be pushed to your highest and best number anyway, so why come in so low?
Make sure your agent finds out if the seller intends to counter offer at all, as sometimes, albeit rarely, a seller will just pick the best offer, especially if it is offering far better terms and price than all the others. Never assume they will counter!
DOWNPAYMENT SHOULD BE SUBSTANCIAL
A large down payment indicates strong financials, and therefore more likely to be approved for the loan.
CONSIDER A LARGER DEPOSIT AMOUNT
The usual deposit is 3%. If the buyer breaches the contract they are liable to lose this deposit to the seller. A larger deposit indicates that they have less intention of backing out as they have more to lose if they do change their minds and back out of the deal.
USE INTERESTING NEGOTIATING TERMS
Now I can’t give all my secrets away here, but know there are ways of being most appealing to sellers in price by ensuring you are in the highest price ball park. If you want to know how I helped my client Ryan win his multiple offer bid for a downtown loft, I’d be happy to explain!
WRITE A PERSONAL LETTER TO THE SELLER
Tell the seller your story, the more the seller can relate to you and like you, the more he is tempted to sell to you, a personal connection is very endearing. Mention why you love the house and how strongly you want to be the next owner!
The seller wants the buyer who is least likely to back out of the deal or change the terms and/or price mid way through escrow. If they believe that you are those buyers, they are more likely to pick your offer.
If a buyer offers terms that are unbeatable, or convincing that they unequivocally want the house and not likely to back out, a seller will often choose an offer that is NOT necessarily the highest in price.
KNOW ABOUT OFF MARKETS LISTINGS
Also known as pocket listings. So while this is not winning multiple offers, it is avoiding them!
What is Off market? These are properties that are not listed on the public MLS and therefore not on all the real estate websites. Sellers have a few reasons not wanting to go public, but what does this mean for a buyer? It means there is far less competition from other buyers as the property is not being exposed to many buyers and agents that have buyers.
You need an agent who is actively looking and finding off market listings for you to see, by soliciting homeowners in neighborhoods that you like and communicating with other agents for any off market properties, this will not only broaden your chances of finding that dream home but also cut down chances of having to compete with multiple offers, which is so frustrating for buyers.
It is very important to have professional guidance and expertize, an experienced agent will not only help you win that multiple offer but also protect you legally. A sellers agent works for the seller first and foremost, always remember that.
To contact me for any questions-
Ten tips to WIN multiple offers when buying a property.
October 2018. Make your offer so strong the seller picks you, even when there are several offers that could in theory be “better” than yours.
Direct line 310-508-5979
Coldwell Banker Residential Brokerage
166 N Canon Drive
Beverly Hills Ca 90210