When it comes to multiple offers, most buyers like to think they were outbid when they find out they didn’t get the house they wanted.
While a lower priced bid may be to blame in some multiple offer situations, there are a few other factors that may have put the nail in the real estate deal coffin.
Multiple Offers Factor #1: Financing terms
Sellers love nothing more than an all cash offer, but most real estate transactions do involve financing of some sort. The more you’re able to put down towards your down payment, the better you’re regarded in the eyes of the seller.
If you’re presenting an all cash offer, include a proof of funds letter with your offer. And if you plan to finance the purchase, see if you can get an underwriting approval.
This type of approval carries more weight than a standard pre-approval letter from your lender.
Multiple Offers Factor #2: Closing date
An extended closing date is usually seen as a negative to sellers. If you’re flexible, consider asking the seller’s agent what the seller’s preferred closing date is, and match it in your offer.
If they want to close as soon as possible, include the earliest possible date in your offer, but be sure to confirm this date with your mortgage lender so they have enough time to process and close the transaction.
Multiple Offers Factor #3: Best and final offer first
I suggest going into a multiple offer situation with your best and final offer price and terms right off the bat. It’s a difficult mentality to grasp for a lot of buyers because they’re so used to negotiating, but your best negotiation strategy here is to come in strong.
To come up with this “best and final number,” I like to tell my clients to think about one number they’d be comfortable losing the house for.
Meaning, if you offered “x” dollars and lost in a bidding war, you would feel okay knowing that if you went higher, you would have regretted spending more than you could or want to.
Multiple Offers Factor #4: Keep it clean
Contingencies are like little gray clouds hovering over your real estate transaction, looming and threatening the deal until closing. Until they are removed and allowed to float away into the sunset, your transaction is at risk of falling apart.
In a multiple offer situation, your Realtor may say that “clean offers” will do better. Keeping your offer clean means less contingencies and a better chance of acceptance. Consulting your Realtor about which contingencies are smart to uphold and which ones to toss (if possible) is a necessity.
Multiple Offers Factor #5: Earnest money
A typical earnest money amount would be at least 1 percent of the offer price. If you’re in a multiple offer situation, double that amount if you are comfortable doing so.
This will show the seller you’re serious, financially stable, and committed. If your offer is accepted, the earnest money will go toward your down payment and closing costs anyway.
Multiple Offers Factor #6: Communication is key
Take the time to write the sellers a letter telling them why you love the home and what it would mean for your family to live there.
Feel free to share a few things about your family, but don’t go any further than what your hopes and dreams are for how you’ll enjoy the home.
Getting into financial health, professional backgrounds, or anything regarding race, religion, or other protected classes would be a huge mistake.
Multiple Offers Factor #7: Stay on your toes
It’s important for you to stay focused and ready to make informed decisions as quickly as possible in multiple offer situations. You can and should expect a counter offer, and the faster you can respond to it, the better.
Working with multiple offers is something most people in our area are dealing with at the moment, and we’ve covered lots of ways to make sure you win in a bidding war.
It’s important to keep a level head and utilize the expertise of your Realtor as much as possible during a market like this one.
Buying a home in Minneapolis, Minnesota? You might find these helpful…
11 Things Every New Homeowner Needs To Know
7 Ways To Win in a Busy Real Estate Market