When a buyer is competing against other buyers on the same home – it can be frustrating! The purchase agreement is filled with different contingencies, fancy terms, and a lot of boxes to check. When you are competing against other offers, it’s important to know how an offer should be written in order to secure the home of your dreams! So how do you win in multiple offers? Whether you currently working with an agent or are seeking representation to buy your next home, my hope is that these tips help you win the home of your dreams.
Here are a few items you can focus on to improve your odds in getting your offer accepted to win in multiple offers:
- Buyers should pay their own closing costs out of pocket at closing and do not add them into the transaction/purchase price asking the seller to pay them (when and if possible of course.) Avoid adding them onto the purchase price as some sellers/listing agents fear appraisal issues. And of course, asking the seller to pay closing costs reduces the net offer to the seller (which is not good for the seller.)
- Strengthen the earnest money – the more amount of earnest money, the better.
- Have your agent check with seller on what type of close date they want. Is it a bank, they usually want to close quicker. Is it a traditional seller who needs time to move? Be flexible with the seller to allow them time to find a home.
- Contingencies – does you want an inspection contingency? Buyers are always encourage to have an inspection, but sometimes buyers prefer no inspection. Not having an inspection contingency strengthens your offer dramatically. Why? The sellers feel at ease knowing there isn’t an additional hurdle of you backing out of your offer. Scared? I don’t blame you! Call a trusted inspector to walk through the home with you prior to offer so you get the best of both worlds!
- Offer the best price you are comfortable with on the 1st offer you make – Remember, it is the net price to seller. For example, $150,000 with seller paying $5000 in closing costs is a $145,000 net offer to the seller. All the seller cares about is the NET. Also, if two offers are exactly alike and the same net to seller, the seller is most likely going to take the offer that has no closing costs wrapped in it. This one isn’t too surprising – the more money in your offer, the better your chances to win in multiple offers.
- Ask your agent to add an escalation clause into your purchase agreement. This is a big one, and one that I’ve had a lot of success with to win in multiple offers. You can contact me for more information on how this works.
- Include a personal letter to the seller and a photo of yourself or your family as well. Handwrite the letter and include it in your offer that goes to the seller. What to put in letter? How much you love the home, a little about yourself, your family, how you will take care of the home and neighborhood, etc. Make sure to focus on the home – do not write things in the letter that would identify protected classes in Fair Housing (race, color, national origin, religion, sex, familial status, disability, marital status, sexual orientation, or that you obtain public assistance).
- Talk to your agent about the strongest way to put together your offer when it comes to the mortgage financing contingency. This mostly has to do with what happens to your earnest money in the event your financing falls through and need to cancel the contract.
- Can you obtain conventional financing rather than FHA (Federal Housing Administration) financing? This can make a difference in situations where the home needs certain items fixed prior to closing in order to satisfy FHA lending requirements that the home is safe & sound. Since the home is insured by the federal housing administration, they want to make sure your new home is up to certain standards. This doesn’t mean FHA financing is not as great of financing as any other options out there – it just means “work orders” should be discussed with your agent to make your offer more appealing.
- If a condo or townhome, the Common Interest Community Modification/Waiver of Buyer’s Right of Rescission document can be included with the offer – this reduces from 10 days to a 3 day time period. Discuss with your agent if this is a good option for you.
- In regards to financing: work with a lender who will do an underwrite of your loan ahead of time for full approval, versus quick approval. Sellers want to know that you have solid financing where all of your financial documents have been viewed to assure them you are able to purchase their home.
- Make sure you are working with an agent who can write a clean offer, free of mistakes. If there are missing documents, items crossed out, and blank spaces where info should be – it hurts your chances of getting the home in a multiple offer situation.
- Ensure your agent is someone that is friendly, is an excellent communicator, and doesn’t say negative things about the sellers or their agent. Why? It could be a reflection of how they communicate with the other side to negotiate on your behalf. Contrary to popular belief, agents on both side of a sale need to work together to ensure they are representing their clients’ best interest. It helps ensure that things go smoothly and everyone is playing nice!
- Give the seller and extra time to move out. Sometimes this is helpful for the seller and should be discussed with your agent to see if this is needed.
As always – don’t hesitate to reach out if I can be of help to you!
Realtor – RE/MAX Advantage Plus & The Minnesota Real Estate Team651.302.4812