How to Win in a Multiple Offer Situation When Buying a House
Buying a new home is stressful, and negotiating a multiple offer situation can make buying a new home even more stressful. Many buyers are afraid that a multiple offer situation means a bidding war where they will end up paying far more than they can or should, but also feel if they avoid multiple offer situations they won’t get a home at all. Although it can be stressful, there are ways to put yourself in a position to win a multiple offer situation.
Make Sure You Are Pre-Approved
Pre-qualified and pre-approved are very different. In a pre-qualification, the lender will take a general overall look at the buyer’s financial picture and issue a pre-qualification letter, subject to the verification of that information once you actually apply for a mortgage. A pre-approval is more involved. The lender will pull your credit report, collect pay stubs, bank statements, W-2s, and verify employment. Most pre-approvals show that the bank is committing to a mortgage loan, dependent only on an appraisal, title search, and other verifications of the property itself. If you are pre-approved, it shows you are ready to buy now and are very likely to secure financing. A seller (and their agent) understand that a pre-approval is a buyer who will be able to secure their mortgage without risk. In a multiple offer situation, a seller will likely give preference to offers where the buyer is pre-approved and has their financing ready to go.
Minimize Your Contingencies and Be an “Easy” Buyer
In a multiple offer situation, the seller may be considering two offers that are similar in size. In this case, you want to be an “easy” buyer. If your agent can find out what the seller is hoping for, you can gain an advantage by appealing to the seller. A clean offer with few contingencies means an easier escrow process for both parties. A seller who wants to sell their home quickly may be more likely to look for the cleanest and easiest offer.
Maximize Your Deposit
The deposit isn’t the same as your down payment, but maximizing both can put you in a good position in a multiple offer situation when buying a new home. A large deposit and a large down payment show that you are a strong financial candidate and will navigate the mortgage process without issue. The last thing a seller wants is a buyer who is unable to complete a purchase due to problems with the mortgage. A large deposit can help the mortgage process move more quickly, and the seller will have confidence in you.
Make a Strong Offer
In a buyer’s market, you can go in with a lower offer and hope to negotiate the best possible price. In a seller’s market, you may not get the opportunity to negotiate. If you don’t put a strong offer in to start, you may simply have your offer rejected and find that the home has sold. Go in with the mindset that your first offer may be your only offer, so if you are serious about wanting this particular house, put your absolute strongest foot forward. This may not just mean your best price, but also letting the seller know that you understand what is important to them. Remove as many contingencies as possible to put together a very clean offer. Talk to your agent to see if you can find out what the seller is hoping for – whether it’s a fast closing, a buyer who won’t nickel and dime any home inspection issues, or a delayed possession. Some agents will encourage you to write a note to the sellers about why you hope to buy their home. Making a personal connection can help.
Rely on Your Realtor When Buying a New Home
Make sure you really understand the current market conditions and the best way to navigate those conditions. Having a quality realtor is the best way to approach a seller’s market. Your agent can help you decide on your offer, put together a compelling “package” to present to the seller, and guide you on how to approach each offer situation. Your agent understands the market and has the connections needed to help you through the process.
Multiple offers can be scary. No buyer wants to find themselves in a bidding war that puts them into a place they can’t afford, and no buyer wants to vastly overpay for a home they aren’t sure about. Navigating multiple offers means finding a realtor that you trust and letting them guide you through the process so that you find a home that’s right for you. We understand the market, and know how to help you get the home you want. Contact Amberwood Real Estate to learn more about what’s out there waiting for you.