When Your Offer Is Not The Only Offer On The Table
When Your Offer Is Not The Only Offer On The Table
Whether you have been house hunting for a day, months, or a couple years it does not change that great feeling that takes over when you find your dream home. It can be very exciting. And when an offer is placed the excitement soars. Adrenaline is at a high and emotions are going crazy. But the emotional roller coaster of finding and placing an offer is nothing compared to what one will experience if it is discovered that there are other offers on the table. Initial excitement can turn to anxiety and frustration.
Unfortunately for buyers, this is happening more and more. I can’t remember the last time I had a buyer where our offer was the only one.
As an agent that actively represents buyers and seller, I will tell you it can be overwhelming for everyone...even sellers. Sellers must sift through the offers and carefully pick one they feel is in their best interest. And a buyer must place an offer that is solid. A seller will look at the offers and quickly get rid of offers that they are clearly not interested in. Another reason why a seller may be stressed during this process is because if they pick the "wrong" offer and the deal falls apart there is no promise that a backup offer will still exist. The other buyers may have moved on or lose interest.
Many times there are a couple offers on the table that are strong. Sometimes it can be a coin toss and other times it is not. One offer may be classified as a back up from the get go and the other may be the clear winner and being the clear winner is the goal, right?
So how can you set your offer apart from the others. Well this blog piece is geared at trying to help ease nerves and tension.
Placing the strongest offer price possible is a must. With multiple offers on the table there is really no time to negotiate. Many times sellers will take the highest and best. Or ask the top tier to counter with their highest and best.
But do take into account taxes, maintenance dues and so forth. While a buyer wants to place the highest and best offer possible they can't overlook taxes and/or maintenance due (if applicable) as it will be factored into when the bank is approving a loan. Like many people there is a budget placed that one cannot exceed and it needs to be recognized and respected. With cash buyers obviously this does not matter. A cash buyer just needs to make sure they are comfortable with the offer being placed.
This is key and the norm. If a buyer is placing an offer (whether a bidding war or not) without a pre-approval or proof of funds, they can kiss the house goodbye because a seller will not take a buyer’s offer seriously without one of these. And sometimes you need both. Both may be required when an offer is being made where financing is occurring as well as a large down payment.
Sellers want to make sure a buyer is indeed approved to purchase their home.
With a mortgage it is normal to request the following contingencies, but it is not required…though highly recommended…
Title, Inspection and Mortgage
If a buyer loads their offer with other contingencies they may give another buyer the edge.
Some other contingencies that I have seen are: broom swept and clean, selling another home first, and so forth. Remember less is more, but a buyer should always do what feels right for them. Having no regrets is important. For instance, once I was working with a buyer that lost out on a house even after he signed contracts (another buyer came in and my buyer would not raise his purchase price). The the sale took place I noticed and communicated with the buyer that the other offer was just $1200 more. My buyer said he had no regrets but that it was frustrating.
Placing an offer with a strong down payment can work wonders
When placing an offer a buyer also needs to understand a weak down payment can show a buyer’s lack of commitment. If a seller gets the exact or similar offering price but sees one offer with 5% down and another with 20% then the 20% will have an edge. One reason for this is because if a buyer changes their mind and wants to walk away it will sting less to lose $20,000 compared to $80,000. Down payment is something that sellers take into account.
Another sure fire way that a buyer can give themselves a good kick in the wrong direction can be to ask for the sellers to pay a concession. For instance, buyer's sometimes ask that sellers pay for the buyer's closing costs. As hard as it may be to not ask, a buyer must ask themselves how much assistance, if any, do they truly need.
Give the seller an offer that is clear and to the point. And sometimes a buyer’s agent can do their homework to find out certain things…not always but sometimes.
A more thorough offer can sometimes be the icing on the cake. In other words a buyer's agent can have a conversation with the listing agent and hope to find what motivates the seller. Finding this out can work in a buyer's favor.
An offer that provides the seller with flexibility to move out of their home may be what the seller needs.
Perhaps the seller is moving across the county and does not need everything they have (i.e. beds, couches, desks, patio furniture and so forth. A buyer could offer to take the house with some belongings. This could help the seller and work in a buyer's favor.
Something else to take into consideration is whether or not the seller needs a quick closing. If a buyer can move fast and they know the seller would like this then this needs to be in the offer. For instant, if the house is vacant chances are the seller would love to go to closing sooner than later.
When determining what purchase price to offer, a savvy buyer knows to look at sold and active comparables (comparative market analysis).See such reports may help to ease purchasing nerves especially as the value of home is never constant. It changes. Peace of mind when buying a home is priceless and this comparable report can provide this.
But don’t forget about the appraisal process if one is being requested. I bring this up to remind buyer's not to go too crazy with your offers. If you are seeking a mortgage the mortgage company will request an appraisal. Also, some buyers today are also requesting these as well to ensure not overpaying. For more about appraisals please click here.
J. Philip Real Estate is Westchester & Putnam's premier independent brokerage. Founded in 2005, the firm has grown from a single broker to a strong organization of well over 80 associates despite the housing downturn. The team's commitment to results and client advocacy, as well as our focus on technology and innovation, have positioned us as the "go to" brokerage for area buyers and sellers.