Real Estate Advice: Navigating multiple other offers as a buyer

Multiple Offers in Real Estate – BUYER Perspectives & Strategies Points

As a SELLER you want multiple offers on your property but as a BUYER it can become a heartbreaking predicament.

When the home you want is also wanted by other Buyers, the burden to win the Seller’s attention becomes a game of circumstance and strategy.  Buyers who play smart with some aggression can prevail over competition.  (it’s not always price that wins)

Buyer’s must be prepared in advance.  The Seller and List Agent will pick apart offers to determine which is worthy of consideration.  When Buyers are prepared to pivot, their negotiations can win them the house.

These are some core factors to be aware of and to prepare in advance:

Financing details are critical – especially when other offers may be cash (loan have more conditions than cash offers).  There are MANY financing tricks to consider if you plan to have a mortgage, and they will make a difference in your offer.  A weak pre-approval or certain types of financing will reduce your chances of winning; a savvy agent can direct a Buyer on different options to make it as win-win as possible.

Closing and possession dates (finalizing the sale/ obtaining keys) can be a huge factor for all parties but the Seller will favor the dates that best suit them.  Vacant homes typically want quick turnaround while other Sellers may need additional time to close.  Some Sellers need extra time to coordinate their move and there are different methods a Buyer can offer to appeal to the Seller’s preferred timeline.  These details need to be discussed ahead of writing any offer and the Buyers who can be flexible will make the Seller’s short list.  Be prepared to know your abilities with move-in dates whether it’s for an offer of if you don’t find the home you want in the time you expected.

Inspections are probably the BIGGEST factor in many offers.  Buyers want them, Sellers avoid them.  Inspections are the largest risk for both sides… without them, Buyers take on potential costs and repairs while Sellers don’t want to be open to losing a deal or having to reduce price due to inspection results.  There can be ways to meet in the middle with outlining detailed terms of an inspection, too, giving ease on both sides of the deal.  Ultimately the offers with the least inspection conditions will rise to the top in the eyes of the Seller.  While at the property – take a very close look if you are interested because you may not have an opportunity to come back for a second look.

Price and deposits… also a big factor because money talks to Sellers.  The more cash you have as a Buyer, the more leverage you may have with multiple offers.  You (and your agent) first need to be familiar with home values in the area you are considering.  Some list prices may be low or high and having an idea of actual value is critical to compare to the Seller’s asking price.  Some Sellers will price low to provoke multiple offers and get a quick result.  Don’t just judge a price based on what the Seller has listed at.  Big numbers will make bigger impression to Sellers, however it’s how the deal ends that matters and if over-bidding is later deflated by an appraisal, the big number may go flat and the Seller’s want to know that the Buyer is wiling to take the burden to ensure the price offered is the price they close with.  If an appraisal comes in below the agreed price, the Buyer may (MAY) have an option to walk-away and leave the Seller at square one.  Buyers can include terms to alleviate this potential and ensure the Seller that the price will not be compromised.  This can also tie into the type of financing and the amount of down payment in the offer.  Working with your agent and lender should give a Buyer the know-how to make your numbers work best.  There is also an early deposit (refundable per the contract terms) called ‘earnest money’ that a Buyer would pay at the beginning of the deal – this is credited to the Buyer at closing but also tell as a Seller ‘how serious’ a Buyer is by the amount of the deposit, as this is the ‘skin-in-the-game’ the Buyer is including.  Cash can be king, but many offers with good financing terms can overthrow the king.  Use of appraisal gap clauses and escalation clauses are excellent options for Buyers to consider.

Find an agent.  If you plan to have representation, interview real estate agents early in the process and learn about the strategies and expectations they present.  Determining an agent before you find the home you want should make the process better and should also save you time and money in the long run.  Buyers ought to begin the process 6-12 months in advance, when possible, by learning the market and planning their home purchase and an effective agent would assist in that process.  There are laws that require Buyer’s agent to form an agreement before they can show homes to Buyers, however that does not mean you cannot interview an agent in advance without signing any commitment with them.  Many agents are also using flexible terms in these agreements to ensure Buyers they are not over-committed to an agent too soon in the process.  Know what you are signing and avoid any last-minute scramble to hire someone you may not have chosen otherwise.  If you choose not to use an agent, it does not always enhance your position in making any offer and most List Agents/ Sellers prefer Buyers have their own agent to oversee the process.

One of the best ways to win in multiple offers is to avoid them.  New listings may have the most attention in their first days on market.  Wait a bit or find listings that have been on the market a while as those listings may be more negotiable and have less interest.  Consider other locations as the ‘hot spots’ may be the areas more Buyers are looking and if you can consider other areas, your competition will be reduced.  Consider other property types such as a home that might need some remodeling or light work.   Buyers are most attracted to picture-perfect homes, but the properties that need a little TLC tend to have less interest and could be a good deal in the long run for Buyers.

Clearly ,this is a detailed process.  It involves good timing, a lot of planning and some luck.  Communications are also critical; first between the Buyer and their Agent but also with the Seller/ List Agent.  Unfortunately, not all List Agents are good communicators and planners – they  do not always tell us if there are other offers, needs of the Seller, or other provide important details.  It’s unfortunate when this occurs therefore Buyers need to be prepared to deal with this when it happens, as best possible.  Buyer’s Agents do have techniques to try and alleviate these situations, but nothing in real estate is guaranteed.

In a nutshell:

·       Start looking early – get familiar with the market to set your expectations

·       Interview Agents to represent you and see you through the full process

·       consider various financing options

·       have a flexible timeline plan

·       know what you are willing to do/ not do for inspection terms

·       show them the money

·       write strong offers

Be flexible, be prepared and be aware of what to expect/ what is reasonable.  Then make your best offers and also be willing to take a secondary position if you don’t win the bid in the first round (a whole other topic).

The big-picture goal is the win the home that you like most; it may involve some compromise or sacrifice.  Buyers need to do decide how bad they want a home and what they are willing to do to get it – then put it in writing.

^{Chris Schlenkerman has helped Westside families navigate these decisions for over 20 years.} 👉 ^{Contact him for a free consultation.}