Multiple Offers - What to do?

It seems we're now in a market where the best houses go quickly and the so-so ones sit at the same list price for months or one minor price reduction. With the houses that do go quickly, the majority of the time they end up with multiple offers. As a buyer, this can be frustrating when you finally find the house you like. Below are a few tips on how to work this type of situation.

Let’s start off with a situation where you presented your offer first. Likely you presented an offer that is lower than what you originally expected to pay for the home, testing the waters to see what the minimum that seller will accept. Within hours/days of submitting that offer, one or more offers are also submitted and in turn are asked to come back with your highest and best offer for the seller to review. You say you love the home and would be sad if the end result is someone else winning the bidding process. In this situation, I would suggest updating your offer so that the net will give the seller the closest dollar amount to the list price as possible. If you’re not approved to purchase at list price, make sure it is as close as possible. If you’re purchasing with cash, you might even be best served with an offer above list price. You could even consider offering $100 above the highest submitted offer, so long as it doesn’t exceed a pre-determined amount.

How about the flip side, where you submit your offer after someone else already has? This is a situation where you want to come in with your highest and best from the get go. Again, if you’re paying cash for the property and are comfortable submitting an offer over list price or one that would beat out the highest offer by $100, then by all means do so. With financed purchases, you would proceed the same way as described above when your offer was presented first. Write your offer to be as close to the list price as possible or slightly over list price.

With financed offers, you’ll want to be careful not to go over the list price too much as the home must appraise for your offer price or you could find yourself having to come up with cash for the difference. In multiple offer situations, you’ll want your purchase agreement to be as ‘seller friendly’ as possible. This could mean closing sooner (or later, depending on whether the seller’s readiness to close), writing cash in lieu of a financed offer, omitting the inspection and even buying the house with debris/trash left in. Reducing the amount of work needed to close can weigh just as heavy as a higher priced offer with lots of contingencies to a seller. Show the seller you want to close this transaction as soon as possible with as few potential problems capable of surfacing while in the process of closing. Another important factor is delivering your highest and best offer as quickly as possible, don’t waste precious time deliberating how you should proceed or trying to speculate what the other buyers are thinking.

If you have questions about multiple offers or other real estate topics, please call or send me an email and I’m happy to help!