"Multiple offers? I thought we were in a Buyer's Market?" Well, it certainly IS a great time to buy in that we are seeing interest rates that are still at historical lows coupled with housing prices that are more affordable. But on the other hand, here in the San Francisco & Peninsula area, we are seeing an increasing number of multiple offer situations. For example, on the last home my clients submitted an offer for, there were 26 (yes TWENTY-SIX!) offers, all of which were put in within the home's first two weeks on the market! Whatever the reasons for this, it's become clear that if a home is well priced or below market value, there's a good possibility that prospective home buyers will find themselves in a multiple offer situation. Here are five tips to help make your offer stronger:
•1) PRICE - no matter how the market changes, this will always be one of the most important issues to a seller, whether you're dealing with a bank or a "real" seller. Be sure to look at market activity in the area and then decide how much you are willing to pay for the home. Just ask yourself: "How would I feel if someone else bid a little more than me and got the home instead?" Of course, don't offer more than you feel comfortable with, but keep in mind that you might only have one chance. Now is not the time to lowball.
•2) KEEP IT CLEAN - what I mean by this is, try to keep your offer as simple as possible without asking the seller to do a bunch of work on the home. Home sellers are trying to sell the home with the least amount of inconvenience, especially if you're talking about a bank-owned property. Of course, if it looks like you're going to need to do some work and you need a little more cash upfront, you can negotiate for up to 3% of the purchase price in some closing costs, but be aware that this will mean that much less profit for the seller (hence, you've just reduced your edge in terms of price - see tip #1).
•3) TIMING IS OF THE ESSENCE - as mentioned above, homes that are well priced or below market will often sell rather quickly. If you are serious about buying a home, make sure to get pre-approved and have your loan agent and real estate agent get in touch with each other, so that you'll be in a position to submit an offer as soon as you find the perfect home. I don't believe in rushing my clients, but on the other hand, I've seen far too many miss out on a purchase because they took too much time "thinking about it."
•4) PRESENTATION MATTERS - although the price, terms & timing are essential in presenting a good offer, it's also important to make a good impression on the seller and listing agent. All other things equal, it will help sway things in your favor if the offer is presented in a complete and professional manner. Be sure that your offer includes a cover letter, a pre-approval letter, and a copy of your deposit (earnest money) check. If the seller provides disclosures, sign them. If you're purchasing a bank-owned house and the bank requires you to get pre-qualified through one of its agents, do it. If you're dealing with a home owner, you might even consider writing a nice letter introducing yourself and telling them how lovely their house is...couldn't hurt, could it?
•5) REPRESENTATION MATTERS - find an agent who can assist you with all of the above. A professional and qualified agent will help guide you through the home buying process and make sure that you have all the resources you need in order to make an informed decision. He or she will be in contact with the listing agent and help present your offer in the best light possible.
This blog is already longer than intended and I'm sure there might be other issues I haven't covered here, so I'd love to hear thoughts from other agents and home sellers on this subject. While it's not easy being in a multiple offer situation, the increased activity among home buyers is definitely a good sign for the real estate market and the economy as a whole.