In certain price ranges we are seeing a significant lack of inventory. The Buyers, however, are out in record numbers. The positive economic news, low unemployment and low interest rates have set the stage for many of the reluctant Millennials to begin their house hunt in earnest. If you are currently looking to buy a home you may have already experienced losing a potential home to a multiple offer situation. There are some strategies that will position you to win instead of continually coming up short.
The first step is to get pre approved by a local lender. A Listing Agent will take a pre approval much more seriously if it is from a lender or loan officer who they know. Get approved ahead of time for the maximum for which you qualify. As a Listing Agent, I recently had an offer accepted at $520,000 with a Buyer who had a pre approval to $625,000. It did not tell me that the Buyers wanted to pay that much..the house was only listed for $535,000…but it told me they were more than qualified rather than stretching. If at all possible the pre approval should specify that the mortgage is not contingent on the sale or successful closing of another home. In a multiple offer situation it may not be good enough to have a solid contract on your existing home.
The offer itself need to be well crafted. Your agent should have already contacted the Sellers Agent to find out their preferred closing date and whether there are other offer. You need to know both of these things before crafting your offer. Closing date can be key to many Sellers. Last year I had my Sellers accept a lower offer because they were building a new home and needed a longer, flexible closing date to avoid two moves and being in a rental.
If you find yourself in a multiple offer situation, understand that you may only get one shot at an offer. The Seller does not have to go to a “Highest and Best” situation or may decide to counter to only one offer at a time. So as not to negotiate against the unknown, I recommend an escalation clause. Go in with an offer but add a clause, “Buyer will agree to $1000 over the highest offer up to XXX”. XXX is the highest you would pay.
Keeping inspection and mortgage approval dates short is another strengthening strategy. Foregoing inspections or stipulating that they are for the Buyers information only, not to be negotiated works if you feel the home is well maintained. Another would be to put down a more then customary dollar amount with the offer or at contract signing.
Finally write a personal letter to the Seller, introducing yourself, your family and what you love about the home. It is not always about the price. I have had Seller’s accept lower offers because of this introduction.
Don’t be timid and work with a seasoned professional. Each $10,000 that you add to the price of a home increases the monthly expense only about $50.00. Don’t lose the house of your dreams for pennies a day. Good luck.