Seller's markets can be fantastic for a home seller and frustrating for a home buyer. You have spent a bunch of time researching areas & properties and have finally found the perfect home, just to find out that you are one of many other buyers offering on the same house. How do you make your offer stand out to be the one the sellers choose? Here are 8 hot tips to help you win that bid and 1 bonus tip.
1) Hire an excellent Buyer's Agent.
Experience matters. Your excellent buyer's agent will be helping you navigate this difficult process and they should have been around the block a few times to be able to best do their job. There are a lot of newer agents entering the market, and that isn't all bad - many of them have a lot of time, a lot of zeal and strive to do their best. However, they may not be able to help you get the one-up in a multiple offer situation, and the listing agent may have never heard of them before. Which leads me to the next point....
Relationships matter. Boise is a fairly big market area and it is growing. But it's not THAT big yet. The agents that have been around a long time all know each other and have worked together on transactions before. This can help or hurt depending on how the previous deals have gone down. What do you think the difference is between a difficult to work with agent versus an easy to work with agent and one that the listing agent knows will get the job done for their clients? It's not the ultimate deciding factor, but in a pile of very similar offers, the listing agent can (and does) explain to the sellers their past experiences and if they trust the agent bringing the buyer. I've had buyers win in multiple offer scenarios many times due to my positive relationship with the agent on the other side.
Details matter. Your excellent buyer's agent should be able to help you put together the very best offer possible with all details considered - which leads me to my next several tips....
2) Submit a clean, well written, error free offer with all the blanks filled in.
This seems like a no brainer, right? You'd be surprised at the messy, incomplete offers we have seen submitted as listing agents. It matters. It can be an indication of how the rest of the deal may go. If an agent can't properly fill out the paperwork will everything else through closing be a mess too? Normally, if this is the only offer, these things can be discussed and then fixed in an addendum clearing them up. In a multiple offer situation? All things being equal with other offers, a messy offer may put you right at the bottom of the pile.
3) Submit a strong offer that does not request too much of the seller.
Your excellent buyer's agent should be able to talk you through some little things that can make a big difference. Sure, everyone wants a deal and would like to negotiate. But, in a sellers market with multiple offers, the playing field is different. You are trying to win amongst other buyers, right? So throw out the idea that the seller needs to provide something to you other than offer acceptance and make sure that you make your offer as strong as possible. That includes paying your own closing costs if possible or raising the purchase price to cover the costs you are going to have to ask the seller to pay so that the net is no different. Negotiable fees that can be paid by seller or buyer you can offer to pay yourself. These little things WILL make a difference. In our area the appraisal can be paid by seller or buyer, as well as the HOA transfer/set up fee. There are several other items such as this that your excellent buyer's agent can talk through with you. Think about it this way: Let's say you and another buyer both offer full price, you both are paying your own closing costs, your loans are the same, your agents wrote clean offers, but you agree to pay the appraisal and HOA transfer fee and the other buyer requested the seller pay them because it is common to do so in our area. Guess who has the upper edge? You do of course! These little details do matter and can make the difference.
4) Carefully consider offering over asking price.
Your excellent buyer's agent should be providing you a CMA (comparative market analysis) which will show you what comparable homes are listed for, those that are under contract and at what price recent properties have sold. This will help you decide what fair market value is on the property and if it is worth purchasing for a bit more than asking price. Offering too much over could cause issues with the appraisal, but this is also something to talk through with your agent. Are you able to cover any costs over appraised value if it comes to that, and if that occurs do you still want the house? How much is the home worth to you? These are careful considerations that your excellent buyer's agent can help you sift through.
5) Or, Consider offering $100 over asking price.
If offering over asking price is not an option for you or simply not worth it, consider an offer just above asking price. You may be surprised that even in multiple offer situations we see a lot of offers right at asking price. Offering just $100 over when all other offers are at asking price may just give you the winning bid, and it has on several occasions for our buyers.
6) Provide a loan approval letter and/or proof of funds with your offer.
Multiple offers and no loan letter? Guaranteed you will be at the bottom of the pile. Listing agents will undoubtedly recommend to their seller clients that offers with a solid loan approval move up to the top of the list. The loan approval letter shows the seller you are serious and that you have taken the steps to ensure that you are qualified to purchase the property. And it can't simply be a pre-qualification letter either. Read this blog post, 3 Levels of Loan Approval - What's the Difference? to see what the difference between Pre-Qualification, Pre-Approval and Underwritten Credit Approval are. Have the best, it will help your offer be the best.
7) Work with a local, well known & respected lender with local underwriting.
Nearly every single time I submit an offer and I discuss with the listing agent that my buyers are working with Guild Morgtage their response is something like "Oh, great! They are so good to work with and we know they will get the loan done and on time." There are other well known and trusted lenders in my area as well, including Idaho Central Credit Union, Evergreen Home Loans and more. But I can tell you that there are others that are well known for delaying, being difficult to communicate and work with and that when listing agents see the approval or hear the name they sigh and groan. Listen to your trusted and excellent buyer's agent. He/she should give you a list of several lenders you can call and you are free to shop around and choose whomever you'd like. But, we've been around the block and we have the true success and disaster stories to prove it. Working with a respected lender that everyone has trust in will help your contract jump to the top, while one of those that evokes a groan from all parties on the other side will cause you to sink below the competition.
8) Read, signed & approve all disclosures, CCR's & HOA docs available. Have your earnest money check written and provide a copy with your offer.
Show that you have ALL of your ducks in a row. You already have your Underwritten Credit Approval Letter. In addition, review and sign the Seller Property Disclosure(s), read through the CCR's and any other available HOA documents to be sure you are satisfied with the rules and restrictions, and provide your earnest money at time of offer. With all of these things completed upfront your agent can submit the signed disclosures, make known you have read and understand the CCRs and provide a copy of your Earnest Money check with your offer. In the listing agent and sellers eyes these are contingencies and small hurdles already removed. You will be one step ahead of all the other buyers who have not gone this far in their due diligence. Bonus! Up to the top of the pile.
Each of these items on their own are beneficial and will provide an advantage, but put them all together and you may just have the winning bid!
BUT WAIT, There's More....
If you still don't win, I have a bonus tip for you.
9) Request to be accepted in 1st back-up position.
Don't give up! If you aren't the "highest and best" but the seller is still willing to consider your offer, ask them to accept your offer as back-up. Contracts fall and buyers terminate for various reasons and if you are accepted in back-up that means if/when the first position offer falls through, instead of the home going back on the marketing and you having to go through a multiple offer bid scenario all over again you will just be moved into first position and proceed to closing. It's not a guarantee that you will end up with the house, but we have some very happy clients who were accepted as back-up and did end up getting the home after the first buyers fell through. It's worth a shot, and it's a better shot than nothing at all.
This blog post is for Debbie Reynolds' April Active Rain contest, Hot Market Strategies.
If you would like to speak to us more about purchasing a home in the Boise area call, text or email John Boles / 208.830.6185 / firstname.lastname@example.org
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