Tactic’s to winning the multiple offer situations, when your buyer cannot compete on price.
Today’s market is very complex and the first-time home buyer keeps losing out to investors.
For a cash buyer: If I am working with a cash buyer I find out upfront how much capital he has to invest in the property. Then I pull REO (foreclosure) comps in his market area to get the Sale Price to List Price % and then work his budget into the equation. This way he would be making offers on properties that he can compete with to win. Another approach with cash buyer is to find out if the property is has any additional fees (example HOA fees, commission, back taxes, etc.) that the seller would need to pay at closing and offer to pay them in addition to your offer price. This will allow for the seller to net more from a lower price offer, which may even out, to the net value for the seller of a higher offer after paying these costs. While the buyer stays within their budget.
For a FHA or Finance offer: When I work with this type of buyer, first I find out if the Buyer has any extra money that they can offer to the seller. If they do then I suggest that they offer their highest and best offer with a clause that sates should the property not appraise the buyer will pay the seller x amount of money over the appraisal and I added in there for the seller to strongly consider this offer as they will be an owner occupant. With the contract ready, I make sure to include a heart-felt, tear jerking letter stating that the buyer will be an owner occupant and if they are a first time home buyer I put that into the letter as well along with their struggle to find a property in the market. I make sure to send a complete offer package with a copy of the deposit check for at least 3% of offer price along with the letter in a presentation format to the seller for review… When dealing with a finance offer I always make sure to obtain a loan approval this will make the offer look solid. Pre-approval letter are not enough in this market.
Most importantly in today’s market is to make sure you show your buyers properties that even in multiple offer situations they will be at a level playing field. The only way to do this is for the agent to know the market area and price ranges. In today’s market, you really have to have a strategy.