How Can You Win With Multiple Offers?

By
Real Estate Broker/Owner with Bend Premier Real Estate 200009031

Win The Home!

You’ve saved and saved and are ready to buy your next home. You’ve scouted several homes and you have found THE ONE. It’s been on the market for six months and you start thinking this house has been neglected – but why? After a thorough review of current market data you submit a solid offer that day. The next morning your agent calls to tell you there are now multiple offers and the seller is instructing agents for “highest and best” within 48-hours and the seller will review all offers then.

The home you dreamed about -  where you’d put the sofa, the kids' toys and room for your skis in the garage feels like it’s slipping away. Your head starts pounding, your heart races and the adrenaline is making itself known throughout your body. Hopefully your agent has counseled you about the chance of this happening. Many of us have experienced this personally, but when it happens to you it can feel like an incredible stroke of bad luck. How can the home you chose after it’s been on the market for months and months now have multiple offers?

 All is not lost, yet now you must step up your game if you did not submit the best offer. There are many ways a seller can handle multiple offers. Sometimes sellers price their homes under market value to procure multiple offers. Other sellers price accordingly, obtain more than one offer at a time and consider the first offer submitted and negotiate in that order. We have heard of other sellers rejecting all offers and request every buyer resubmit. This is a high-risk choice that we would not recommend as some buyers will walk away sensing that future negotiations will be one-sided and it’s quite a “slamming-the-face” experience. 

If you find yourself in a multiple offer situation, work with your agent on submitting the strongest offer you can — right then. Now is not the time to see if this is a really happening. Holding back by trying to keep “a little bit more” to negotiate could result in losing the house. Some buyers have lost homes over a very minuscule dollar amount — less than one-half of one percent of the sales price. Tough call to make, right? It’s tough because after all the research and reading you may have done online is not working in your favor at this moment. We relate it to the birthing plan you put into place while awaiting the birth of your child. They’ll come no matter what time you wrote on the calendar. NOW is the time to put your best offer forward. Here are some tips on strengthening your offer:

  •          Put a large earnest money deposit down. A seller will take your offer more seriously with a larger deposit. Your offer likely has other standard contingencies that protect all parties throughout the escrow period so if it seems like it is a large amount of earnest money, it is protected up to the point of you removing all said contingencies.
  •          Write a letter to the sellerLet’s face it — real estate is a fairly emotional transaction with a few exceptions (i.e. new construction, bank-owned). Write a short letter to the seller/owner touching on two or three reasons why their home is perfect for you and your family. We have seen several multiple-offer situations this past year and the buyers who have submitted letters have been more successful than not.
  •          Shorten or waive some contingencies. This options requires careful review; however, if you are confident that the property could skip the inspection, you can decide to waive it — or shorten the time frame requested to obtain a property inspection. We always recommend a property inspection so this suggestion doesn’t come lightly.
  •          Work with the seller on possession. If the owner is being relocated and must sell before they can buy, offer a one to two month rent-back for them to stay in their home while they look for their replacement property. The rent-back could even be at no-charge. Your first house payment usually begins one to two months after you close. Spending a few thousand dollars remaining in your rental could be worth it in the grand scheme of things. Use that time to go through your things, eliminate clutter in your current residence and you’ll have time to move out without feeling rushed.
  •          Escalation Clause. These were used quite often during the last real estate rush. An escalation clause essentially says you’ll pay a set amount above the highest offer submitted to the seller with a disclosed cap of the maximum you would pay. If the seller hot button is getting highest price possible, an escalation clause could be helpful.  Your buyer’s agent will keep you posted, hopefully on a daily basis, while you are in this potentially stressful situation. Potentially? It IS stressful! Patience and communication is greatly appreciated by all parties.  You may not be the winning home buyer, but if you do not submit an offer you do not stand a chance of winning.Money for House

Remember that sometimes offers are not all about price.We have had sellers accept lower offers in multiple offer situations because the offer is just better for that seller at that moment in time. If you do not succeed the first time, hang in there. There is always another home that will come on the market that is as good, if not better, than the one you initially fell in love with. Going through the experience is not doubt an emotional roller coaster; yet never fear. As your real estate agent, we are here to help you understand the process and keep you informed.

 
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Rainer
402,215
Dan Hopper
Keller Williams Realty Downtown LLC - Denver, CO
Denver Realtor / Author / Advocate/Short Sale

Oh boy... a topic that many of us "old timers" have experienced during crazy times over the last 30 yrs.  Best advice we could ever give to our buyers... "Yes, you will over pay to WIN", make an offer that they can not reject.  Of course, it is not that simple, we do have the right "trigger clauses" to ensure that the crazy is not in the contract.  Good topic,  !!

Jun 25, 2019 04:57 PM #1
Rainmaker
389,371
Lynnea Miller
Bend Premier Real Estate - Bend, OR
Premier Real Estate Service in Central Oregon

Hi Dan Hopper . We are seeing more and more multiple offers again in our market! Glad you checked in.

Jun 25, 2019 05:24 PM #2
Rainer
439,380
John Dotson
Preferred Properties of Highlands, Inc. - Highlands, NC - Highlands, NC
The experience to get you to the other side!

Lynnea, a great bunch of tips that should work in any market. The only one I have a question about is the Escalation Clause - which I have never used.

Is the seller required to show the "escalation" buyer the offer he had to beat?  How does the "escalation" buyer know he isn't being scammed by the seller?

Jun 25, 2019 08:20 PM #3
Rainmaker
389,371
Lynnea Miller
Bend Premier Real Estate - Bend, OR
Premier Real Estate Service in Central Oregon

Hi John Dotson . Part of the escalation clause requires the seller to provide verification of the next best offer, including any seller credits.  This is typically done by the seller giving a copy of the pertinent sections of the other offer. The buyer's names on the other offer can be whited out, but this does show proof.

Jun 26, 2019 11:26 AM #8
Rainer
4,472
darcy sledge
Westport, CT
Business Builder

I have seen escalation clauses work both ways.  In some situations, they are a turn off , even if they offer potentially more money.  So ask your agent if they are used in your market.  One buyer offered to pay seller closing costs as an incentive. 

 

And it't trick when a buyer says ,"what should my offer be?  I don't want to over pay, but I really want the house...." 

A wise agent gave me this suggestion which I think is a good one: tell the buyer that they should offer a number that if they hear they lost the house by $5000, they can say it's OK.  I would not have paid the extra $5000.   What do other agents do in that situation?

Jun 27, 2019 01:51 PM #9
Rainmaker
389,371
Lynnea Miller
Bend Premier Real Estate - Bend, OR
Premier Real Estate Service in Central Oregon

Hi darcy sledge . Our brokerage uses the escalation clause very successfully. But I like your idea of the buyer offering to pay the seller's closing costs (less commission!) as an added incentive.

Jun 27, 2019 02:47 PM #10
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Rainmaker
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Lynnea Miller

Premier Real Estate Service in Central Oregon
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