When you’re in the market to buy a home, you’re very likely to run into a multiple-offer situation where you’ll have to compete against other buyers. If you want to navigate the bidding war smoothly and find success, keep the following five points in mind:
1. Know your competition. Track how many offers you’re bidding against and make sure your agent asks how many disclosure packages have been downloaded. Around a quarter or a third of the number of disclosure packages downloaded will indicate how many offers you can expect to bid against.
2. Know the market. Figure out what the average list-to-sales price ratio is for the last two or three homes that have sold in the neighborhood in which you’re looking to buy. If homes are going for $20,000 to $40,000 over asking price, you’ll want to be prepared to pay at least that much over the last sale in the neighborhood. That may cause some concern about overpaying for a home, but consider the fact that prices have consistently grown 10% year over year. If you bid 2% to 3% over the last sale price, you’ll easily recoup that much in just a few months.
3. Remove as many contingencies as possible when writing your offer. If you’re working with a lender, see if you can get a full loan approval so that you can write an offer with no loan contingency. If you’re looking at property contingencies, review those inspections if you had a seller that has provided them. If not, ask the seller’s agent if you can do your inspections before presenting your offer. That way, you can come forward with an offer that has no appraisal or loan contingency.
4. Get personal. Write a personal letter to the seller telling them why you love their home and what you foresee living in that neighborhood would be like for you and your family. You’d be amazed at how effective this is; we’ve won in multiple-offer situations where ours wasn’t even the top offer, but because the seller connected to the letter, they went with ours.
5. Get a written backup offer in place. In multiple-offer situations, it’s common for the winning offer to back out eventually for some reason or another. If that happens and you have a written backup offer, you’d be the first in line for that house.
Of course, all of these tips assume that you have a great agent and negotiator working on your behalf. If you are thinking of buying and you have any questions, reach out to us. We look forward to helping you.