The market is on 🔥🔥 right now.
Sellers are getting what they want for their home (and sometimes more than they expected) and with interest rates being SO low, buyers are getting the home of their dreams with a comfortable mortgage payment.
Anyone who is shopping for a home right now knows that it can be brutal out there, with homes that are priced and marketed well selling in just a few days, often with multiple offers.
If you’re shopping for a home or an investment property right now, chances are you may have lost out on a deal or two to multiple offers
So how do you win when there a multiple offers on the table? You have to STAND OUT!
I’ve put together a list of my secret strategies that I use to help my clients win multiple offers
Okay, they’re not exactly secrets…but your average home buyer (and even your average realtor) doesn’t know about all of these, or doesn’t know how to use them properly
These aren’t your watered down, generic strategies that you’ll find on Zillow articles
These are real, boots-on-the-ground strategies that top agents like myself are using everyday to help our clients win their dream home
Let’s get to it!
1.) Get Personal
One thing I advise my clients to do in multiple offer situations is to write an introduction letter to the seller. This letter should introduce yourself, tell them a little about you and your family, and tell them about how much you love the home and all the wonderful memories you and your family look forward to making there.
The idea here is to tug on the heartstrings as much as possible (without being over the top) and get the seller out of their head and into their heart. All other things being equal, a seller is almost always going to go with the offer with the personal letter simply because it stands out. In fact, I have used this to help my buyers get their offer accepted even when things weren’t equal; for example I had some first time buyer clients of mine write a letter talking about how they couldn’t wait to celebrate the holidays in their first home with their newborn baby. It turns out that the seller was in the exact same position as them when she originally bought the house, and she ended up accepting our offer over other slightly higher offers.
Now, an experienced listing agent may advise their client to not read the letter for this very reason so that they can stay objective and make the logical decision rather than the emotional one, but it’s worth a shot and majority of agents will happily pass the letter along.
2.) Escalation Addendums
An escalation addendum is used in situations where you are willing to pay more for the house than you originally offer, but also want to make sure you’re not paying more than you need to. Sounds pretty good, right?
An escalation addendum works a little like an auto-bid on EBay; you make your original offer, and then you also set another offer as an upper limit that you are willing to go up to. Just like eBay, your offer will only increase in the event that there is another competing offer higher than your original offer.
A typical escalation addendum would look like this:
A home just hit the market yesterday; you love it and it fits everything you and your family are looking for. The home is listed for $400,000. Of course, you want the home, but like any smart person want to save as much money as possible, so you put an offer in for $390,000. Your agent advises that there are multiple offers on the home, so they prepare an escalation addendum. You identify your top price you’d be willing to pay for the home as $410,000. Now if no other offers are higher than your original price of $390,000, your offer would stay there. But, if a competing offer came in at say $400,000, your offer would automatically increase to $401,000 and you would ideally have the winning offer without having to go up to $410,000 (of course there are other terms and conditions to take into account as well). Which brings me to #3…
3.) Revisit your terms and conditions
There is much more to an offer than price, and these can be sometimes just as, if not more important to the seller. Some terms and conditions to keep in mind could include:
Settlement Date– Are you perhaps renting month to month, or living with family and friends? That flexibility on when you want to move into your new home can really come in handy. Have your agent find out what would be an ideal timeframe for the seller; are they elderly and need to take it slow with moving, so a 90 day close would be ideal for them? Or maybe they’re relocating and need to be out by the end of the month, so a 30 day close would work best? This is definitely an important factor in getting your offer accepted.
Inspections– There are a few things you can do with inspections to increase the chance you’ll win with multiple offers. One option is to expedite your inspection dates so that you can remove that contingency quickly and move forward with the sale, or to agree to purchase the home as-is (you can still do inspections but the seller is saying upfront that they are not willing to do repairs). Another is to waive the inspections entirely; you should have a serious talk with your agent about this before you make the decision, and make sure it’s absolutely worth it. But, in the right circumstances, it can be really powerful. Maybe it’s a newer home and you feel like anything that would come up on inspections would be cosmetic or minor repairs. Personally I’ve had situations where my client and I decided it made sense to waive inspections because they worked in the trades and were good friends with a roofer, electrician, carpenter, plumber, etc, so they were comfortable with any repairs that may come up and could get their friends to help out with it.
Deposits– You can increase your upfront earnest money deposit, do a second earnest money deposit after a certain amount of days, or even do a non refundable deposit to show you are serious and committed to buying the home.
Settlement Help– Asking for settlement help in a multiple offer situation can make things tricky. On one hand, it’s all about the net offer to the seller (purchase price minus the seller paid closing costs) because that’s ultimately what they get at the end of the day. On the other hand, you have to consider for appraisals. By reducing your seller paid closing costs, you are able to reduce the purchase price by an equal amount to get the seller to the same net offer, and in turn by reducing the purchase price, the higher the chance that the appraisal will meet value.
Inclusions/exclusions– Are there any things you’re asking for in the sale that you could exclude? For example, let’s say there is a home theater system that you want included with the sale of the home you’re looking to buy. The seller, on the other hand, was really looking forward to taking the system with them and setting it up for movie night in their new home. By taking the home theater system out of the equation, you may help your odds of beating out other offers if they are asking for it as part of their offer as well.
Home sale contingency– If you own your current home and are able to go non contingent-meaning you can purchase the new home without selling your current home first- that can make a huge difference. Majority of buyers in the market are non contingent, so having a home to sell contingency is really more of a handicap, and removing this contingency tends to put you in the running with other offers rather than having an advantage over everyone.
Financing– Switching your financing to something that is more acceptable to the seller. This only really makes a difference in certain situations. Generally Conventional financing is considered the strongest financing (other than cash) because it is more lenient on appraisals. This only makes a big difference if the home needs some TLC and may not pass the appraisal in its current condition. Other than that, switching financing could help but generally isn’t a huge factor, especially if other offers are higher.
4.) Carefully choose your lender/agent
Obviously, this is something you should take into account when you begin shopping for homes rather than when you’re making an offer, but it’s important nonetheless.
Working with a great agent and lender that are both locally known and trusted can make all the difference in the world, not only throughout the process for you, but also to the seller and their agent, and may just be the deciding factor in which offer a seller takes. On the flip side, using an unknown lender who is based in Michigan when you’re making an offer on a home in Delaware generally won’t help your case, and working with an agent that’s known to cause problems where there are none, or not be responsive and communicative throughout the process could very well be the deciding factor in NOT accepting your offer.
5.) Purchase Price
This one is a no brainer, but, let’s dig into it a little deeper for a second. To decide if you’re comfortable going up on the purchase price, you really have to decide what that extra money means to you in the context of your life. A good rule of thumb is that every $10,000 you go up on your purchase price, your mortgage payment increases by about $60 per month (of course this is an estimate and interest rates at the time may change this). What does that $60 per month mean to you? $60 could mean a night at the movies with your family of four once per month. Does it make sense for you to wait for that movie to come out on on-demand or Netflix if it could mean the difference between getting or losing your dream home? That’s definitely something to think about and discuss with your family.
6.) Win the war before it even starts
By working with your agent to craft an offer that is irresistible to the seller, you may be able to avoid a multiple offer situation all together. Find out what is important to the seller as far as terms and conditions go, and write a strong offer upfront. The catch here is that you have to be the first offer, and you have to set an expiration date on your offer; if done correctly, this can create a “bird in the hand is worth two in the bush” situation and can help your offer get accepted before other buyers have the chance to submit theirs, potentially saving you money, time, and headache.
If you are in the market for a home or looking to sell in Delaware or Maryland, contact me as I’d love to explain how I get my clients to win with multiple offers.
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