We see it time and time again when presenting multiple offers to our sellers. Offer after offer comes in poorly written with missed initials, incorrect dates, poorly written conditions etc. Sure it is full price. But there are 2 weeks of conditions in a market where 5 business days does the job. When working for the seller we will definitely steer clear of that offer and recommend another that is written correctly.
It is a seller's market right now. There are more buyers than seller. This is partially a result of low mortgage rates, but it is also a result of high immigration numbers to our neighborhoods and little new home inventory on the market. Fortunately for people looking to lock into a 5 year finance rate they are going to be paying very little interest at this time.
Not all homes are selling in multiple offers, but a sharply priced home will more often than not see at least two offers after the first weekend of open houses. Sprinkle in there the homes that have been staged, have professional photos and prepped to be marketed, guess what... you are not the only buyer intrigued!
So how do you win without simply over paying? Well here are a few of the tried and true methods to making a seller interested in your offer instead of your competing offers:
1) Don't start off with a low ball offer
We know pretty well in advance whether we will be competing on that hot new listing you love. Every house is unique. Analyze the price in advance. If it is priced high, offer accordingly. If it is priced advantageously you need to come in strong.
Don't start off on the wrong foot. Contrary to the glory stories you have heard, not many offers come in at 95% of list price and then get negotiated up to a mutually agreeable price. In multiple offers, list price is rarely taking it but a well presented offer at list price is a lot more enticing to the seller who is looking through 4 or 5 different offers than one well below list price. Putting in that bully low-ball offer is a cheeky move that often frustrates the seller and even if you were to come up in price, your initial move will often would cost you the home because the seller isn't interested in working with someone who originally low balled them.
2) Put down at least 5% deposit monies
Not everyone has cash sitting around to put towards the home upon subject removal. But by putting down at least 5% as an initial deposit, the seller will feel much more confident in selecting your offer over the other offer with only a 3% initial deposit. It is better to put down that extra $5,000 of deposit monies and show the seller you are confident in your financing, therefore instilling confidence in the seller in selecting your offer.
3) Write a letter
It's funny, in a buyer's market, offers are usually accompanied with a bullet point list of problems with the house. in multiple offer situations, you need to personalize your offer. We always use names to personalize your offer. The seller needs to know that it is you and your family moving into the neighborhood and not just a number on the page. In most multiple offer situations we include a cover letter with the offer about you and your family so that they are choosing you over the other faceless offers that might actually net more for the seller. The "we love the house" strategy should only be used in very competitive situations. In other context, it will weaken your offer.
4) Shorten those subjects a little
Those offers that come in with 2 weeks for conditions are quickly pushed to the back-burner, even if they have the highest price point. Having as few subjects as possible for the shortest time required, while still protecting the buyer, is important. In today's market where lenders can get the job done in 5 business days, maybe even 4 if you have the connections we do, there is no need for two weeks for the financing condition. Similarly if you do have an inspection clause, there is no need for any more time than the financing subject. Scheduling an inspection just a few days from getting the accepted offer is common and inspectors are counting on the business!
5) Use the right lender
We all have a bank of choice that we work with. But just because we know the friendly teller up front doesn't mean they are the best bank to get your mortgage from. A mortgage broker is someone that can work with numerous different lenders and can work on your behalf to get you your best rate and mortgage terms. Did you know that mortgage brokers are paid by the lender? The best thing about mortgage brokers is that they do not close on the weekends or at 5pm like the big banks. Rather they work 24/7 and are always accessible for updates. Having a broker that gives honest advice and stays connected is invaluable and adds security to both buyer and seller alike.
The most obvious way of winning a multiple offer is paying way over list price, but over paying is not always in your best interest. The best way to win is to present an offer that is packaged appropriately with a strong price, appropriate dates to satisfy the seller's needs, minimal conditions, while still staying protected, and short subject dates. Furthermore, we are very easy to work with and other realtors know that and will advise their client accordingly. Our proactive approach of being easy to work with is how we have won numerous multiple offer situations where our buyers have been one of many comparable offers with not necessarily the highest price.
The over bid doesn't always win. Sometimes it is the presentation that counts.