If you’re in the market for a home in the DC area, chances are you’re familiar with the dreaded multiple offer situation. With continued low inventory and high demand, with any new well-priced listing, comes a fairly good chance that there will be other interested buyers considering an offer as well. In multiple offer situations (also known as bidding wars, although they aren’t actually), buyers typically have one chance to submit their highest and best offer. Below are our tips on how to make your offer as “seller friendly” as possible and differentiate your offer from the others a seller might receive. One thing to note in advance is that every seller is different, and having your realtor inquire on the seller's specific preferences is always the best starting point in crafting a winning offer strategy.
This one may seem obvious, but starting with a realistic price is essential to staying in the game. Offering a net sales price (sales price minus any seller credits) that is below the list price isn’t generally going to bode well for offer acceptance. Start with a realistic net offer price that is in line with the market value, including any seller credits in the sales price, and consider an escalation clause if you are comfortable going above the list price.
- Fewer contingencies.
Contingencies offer a buyer protection during a home purchase and offer options for negotiation during several key points. While beneficial to a buyer, contingencies represent a risk in a seller's eyes, risk that the contract may be terminated during one or that the price may be further negotiated. A seller will typically perceive a greater risk than actually exists and may value the risk from a monetary perspective as greater than the actual dollar amount, as a buyer try to minimize the contingencies to only what you feel is necessary for your protection.
- Have your financing ready to go
Establishing a relationship with a local lender early on in your search process can be a game changer when it comes to competing with multiple offers. The lender who you choose should assist you with a full pre-approval or loan approval if they provide that option. A pre-qualification letter isn’t sufficient for communicating to a seller that as a buyer your ability to obtain a loan has been carefully verified. The lender with whom you decide to work should be willing and able to contact the listing agent of the home you are interested in to answer any questions and confirm that you are a qualified buyer, and this phone call can set your offer apart from those where the lender is not readily accessible or invested in the success of your offer.
- Beyond the numbers
Part of any good negotiation strategy is an attempt to determine what matters most to the other party and submitting a strong offer is no different. Have the sellers already moved? Are they paying 2 mortgages? Or do they need to find a home to purchase themselves? Even if they don’t expressly state specific preferences, inquiring into the specifics of the seller's situation can help provide insight into what features of an offer a seller will find appealing and including these can help set a buyer up for success.
In a multiple offer situation, a listing agent may receive several offers from various agents in a short span of time. Speaking from personal experience, offers that arrive on time, are complete, and include an offer summary and all necessary components, indicate an organized buyer (and Realtor). In comparison, offers that arrive late, where terms are changing at the last minute, are missing documents or don’t have all of the necessary components, don’t forecast a smooth transaction. A listing agent may or may not indicate this information to a seller for their consideration, but since there is a chance that it may help we’re all for it.
Last but not least, if you find yourself back at the drawing board, wondering if it's worth starting up your home search again after not having an offer accepted, know that you are not alone. With continued persistence and perseverance and using these tips to put your best offer forward, it’s only a matter of time before you’ll be celebrating having an offer accepted.