When there's multiple offers on the house you want, 'play' might be the wrong word. Sometimes it feels more like a war. One where you can't actually see what your enemy is doing and you feel like someone else is determining all your moves.
I am seeing multiple offers on homes for sale, and I expect that trend to increase unless there's a major change in this spring's inventory.
Being one of many offers on the house you want to buy is not fun - and often times, potential buyers will walk away rather than play that game.
But let's think about that -
How much money does it cost to submit an offer on a house in Colorado?
Answer: $0. If anything, it costs your agent to print the offer, or the fee they pay for electronic signature services, but that's the cost of doing business and doesn't roll over onto you.
What is the risk of jumping in on multiple offers?
- You might get emotional and pay too much.
- You don't know if you're already the highest offer, so if you offer more, you could be bidding against yourself.
- You might lose the house you want to buy, only because of being a few hundred dollars short. (If you had known how much the winning bid was, you would have been willing to offer more.)
What's the best strategy:
- Make the highest and best offer you can, and determine to be at peace with the results. Don't let yourself get emotional.
- Take a look at the contingencies in your offer, and remove any that you can up front, if possible.
For instance, while I would never advise buying a house without an inspection, perhaps you could include in the offer an agreement that you won't 'nit-pick' the owner to death with minor inspection issues. Perhaps you could state you would only ask for repairs if anything to be estimated over $X,000 is discovered.
- Make sure your agent ASKS how much the other offers are.
The seller doesn't have to answer this question and some agents have strong feelings against it. But - with the seller's permission - they CAN disclose how much the other offers are for, or at least what it would take for your offer to be on top.
- Try an escalation clause.
These can be tricky because you're telling the seller right up front that you're willing to pay more than what you're offering, and you have to trust the seller and their agent if they say there's a higher offer, causing your escalation clause to kick in. But an escalation clause can be just the ticket if you're only a few thousand bucks lower than someone else.
- Don't give up without trying
Whenever I have a listing with multiple offers, there's always one agent who tells me his client is withdrawing their offer because they 'don't want to get into a bidding war'. I always wonder where that idea comes from, because it seems like a totally manageable and low-risk endeavor.
True, you might not win if you get into a bidding war. But then again, you certainly will not win if you don't try.
What to do If Your Offer Didn't Win:
- Advise your agent to ask the seller's agent to keep your offer on hand, in case the winning offer fails.
- Keep looking at homes.
In fact, be sure you look at homes for sale the day they hit the market, if possible. If your schedule doesn't allow you to move quickly, be sure you're working with an agent who will preview homes for you (and by 'preview' I don't just mean looking at the pictures. I mean they will physically go look at the home.) If you've looked at a few homes and made an offer on one, your agent should know you well enough to recognize a real contender when they see one.
If you plan to buy a home in Denver's northwestern suburbs, I wish you the best of luck. If you need a real estate agent who will work hard for you, and who knows the communities between Denver and Boulder, please give me a call.
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I write posts on real estate issues and local events in the Denver metro area, especially those communities between Denver and Boulder, as a public service. My hope is to give people an idea of the ‘flavor’ of our community, in case they’re new or moving to the Denver area.
I am a residential real estate agent, happily helping folks buy a house or sell a house in the beautiful and friendly suburbs northwest of Denver. Read what past clients have said about me.
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Copyright © 2013 Joetta Fort, The DiGiorgio Group
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