The inventory in Boston is low as are the interest rates causing many multiple offer situations. If you find yourself competing in a multiple bid situation what should you expect?
There are several ways a listing agent handles a multiple offer situation.
The first question I always receive from first time home buyers in this situation is “How much are the other offers?” The listing agent, unless instructed by the seller, is not allowed to disclose this information. Most of the time this information is kept private.
As the listing agent represents the seller, it is the best interest of the seller to not disclose the other offer prices. I had one case where there were multiple offers and the agent told me the other offers were a few thousand higher and asked for best and finals. In the majority of multiple offer situations we do not receive this information.
At What price should I start the offer process?
I am encouraging buyers to put their best foot forward. It is possible you will not get a second chance. Sometimes the listing agent comes back and asks for best and finals but if there are several offers they may choose to work with just a few of the best offers.
Is it possible that someone with a lower price could get the property?
Yes. There are several things a seller will look at when considering offers. How much money are you putting down on your loan? 20 % or more on a loan makes you a strong buyer. Are you paying cash? A seller will sometimes take an offer that is slightly lower if it is cash. Guaranteed sale with a minimum amount of bumps in the road.
Can you meet their closing date? I am seeing more and more a request for an extended closing so that the seller can locate a property. Sometimes they ask for a quick closing as they have already identified a property. The rental market is also very competitive so if you are in a lease we can most likely assist you in renting your apartment early. Getting caught up in the dates can lose you a property.
What about contingencies? How quickly can you complete your home inspection? Sign the purchase and sale? The seller has agreed to take their property off the market while you are in your due diligence period. The quicker you can complete this phase the better.
After the due diligence period there is only mortgage commitment. The more information you have provided to the mortgage representative the better. A simple running of your credit is not enough. The more prepared you are the better. Can your mortgage rep call the listing agent and state with conviction that you are a fabulous buyer?
Are you willing to remove some contingencies? This is my least favorite strategy and for the average buyer this is not an option. However for a certain buyer this could be an option. An offer should always reflect your comfort level.
There are other strategies to win in a multiple offer situation. I honestly don’t win in every situation but am successful in helping my buyers get into their new homes in many cases. I am happy to meet with you and discuss strategy.