How to Win in Multiple Offer situations
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I just wanted to reach out today to talk about multiple offers. So anyone here in the Denver at the moment, whether you're selling or buying or anything, is well aware of the fact that multiple offers are VERY common. If a home is priced right and the condition is good, it's probably going to have multiple offers on it.
As a buyer it can be really frustrating to have to compete with that! Here are 5 different things, that you can do as a buyer, to help you strengthen your offer in a multiple offer situation.
Your Realtor should have some great suggestions regarding escalation clauses, appraisal gap coverage, favorable terms, and things like that. But as a buyer, there are 5 big things I think you can do that would really make a big difference and help you stand out.
1. Highest and Best
Seriously, know your highest and best, and make a strong offer. I know a lot of people are hesitant to go over asking price, especially if it's your first place. No one wants to pay more than they HAVE to, but if offering less means you don't get the house you want, you still lost.
Your Lender is going to require an appraisal to make sure you can't overpay for the property. They're not going to let you, because they're giving you the money for it.
To figure out what your highest and best is: make sure that you're willing to offer whatever the property is worth to you. What I tell my clients is you need to think of that price, that if someone were to pay $500 or $1,000 more than you, that you're okay losing it at that. That it's not worth it to you. So think of that price that the property is worth to you, and that's really your highest and best offer.
2. Write a Love Note
I call it a love note, but it's just a personal note from yourself to the seller(s). Homes are emotional things. People live in them, they grow up in them, they raise their kids in them. You want to be able to connect to the seller, and they want to know why you love their home. A little note like that, just something simple. Don't add pictures, because then you can get into discrimination issues. Just a little note goes a long way and it's free! It doesn't cost you anything, it takes ten minutes, and it can seriously make a big difference.
3. Extra Earnest Money
Your earnest money, at least here in Colorado, is pretty safe compared to some other states. Our state contract is VERY buyer friendly, so consider putting a little bit of extra earnest money down if that's something that's available to you. Essentially, it tells the seller, “ I'm serious and I want to get the deal done. Let's get moving.”
4. Be Decisive
If you know you like the place, put in the offer. If the seller has a question for you and says, “Hey, I want you to know we got another offer, would you be willing to pay what they are?” Respond and Be decisive! People who are slow to respond and indecisive can make sellers really nervous! The further along in the process, the more chances there are for you to change your mind and put the seller at risk. Being indecisive can be a BIG red flag to a seller. Know what you want and be able to make decisions.
5. Hire a Good Agent
I know this sounds obvious, but its pretty simple. Hire a good agent! Like I mentioned, most agents are going to have their own strategies for multiple offer situations. Ask what their acceptance ratio is; so for how many offers they put in a multiple offer situations, how many get accepted or countered? It can really make a big difference. Their job is to work for you (assuming you actually hired them), so having someone that knows what they're doing in multiple offers and can stand out can really be the difference of getting you the home you want.