How To Deal With Multiple Offers As A Home Buyer
In todays housing market, homes that are properly priced are receiving multiple offers making it difficult to get your offer accepted.
At Help-U-Sell Conejo Valley, we have significant experience handling multiple offer situations for both the buyers and sellers we represent.
If you find yourself in a multiple offer situation on a home you want to buy and the seller requests your best and highest offer, there are a number of different strategies you can apply.
You can walk away. Some buyers just do not want to find themselves in a bidding war against other buyers and just opt to pass on the property.
You can reaffirm your price. A request for highest and best price does not mean your offer is not the highest or best offer. If you are comfortable with your offer and believe it is the right price based on market comparables, responding with the same price is reasonable.
You can raise your price. Most buyer offers are written with loans and appraisal contingencies, which means that if you offer more than appraised value, you can use the appraisal to renegotiate the purchase or walk away. Often times, the best strategy is not to overthink the price versus value, but to make a more aggressive offer, knowing that if a 3rd party independent appraisal is not the same or more than the offered price, you have leverage to renegotiate or the option to cancel your offer without risking your earnest money deposit.
You can improve the terms. Often times, terms favorable to the seller greatly influence which offer the seller chooses. Sometimes favorable terms will result in a offer being accepted that is not the highest offer. Terms that can be adjusted to improve your offer include a shorter inspection, appraisal and loan contingency. A longer or shorter escrow period, depending on seller needs. More time after closing for the change of possession (let seller stay in the house with or without rent for a short period of time to make the transition easier). Increase the earnest money deposit or down payment amount to show a stronger commitment to close. Waiving a home warranty, offering to pay for seller closing expenses or offering to buy a home in “as-is” condition are other ways to strengthen your offer.
You can add an acceleration clause with a ceiling that increases your chances of getting your offer accepted without going beyond your financial means. This is a more aggressive option, where you will bid some amount higher (say $1000) than the highest bid. With this type of accelerating offer it is best to put in a ceiling price as well so you don’t go above a desired limit. An offer like that for example might read “we offer $1,000 more than the highest bid but no higher than $600,000.00” (depending on your budget, mortgage preapproval amount and what you and your real estate agent feel the house is worth)
Multiple offer situations are nothing to panic about if it happens with a home you are trying to buy. As a buyer try not to let emotion override logic when it comes to putting forth your best offer. Focus on the long term and work with your agent to make sure you are not exposing yourself to risk or liability with your offer and counter offers.
Multiple offers are a naturally occurring outcome of an active real estate market and we are very experienced at assisting you with identify sound strategies that assist you with successfully navigating a multiple offer situation.