Since multiple offers are so common right now, I thought I’d throw out some key tips for when you are sitting down with your broker to write an offer on a home. These aren’t exactly secrets, but it’s surprising how often one or more of these steps aren’t taken which can easily lead to buyers losing a home of their dreams. Now don’t get me wrong, it is almost impossible to guarantee a win in multiple offers because there often seems to be someone willing to either pay more, or willing to risk too much to get a house. But, following these few tips should at least guarantee you the best chance at a winning offer, even if you are not necessarily the highest priced offer.
- Get pre-approved! This is critical before any offer, but you obviously need to know exactly how much you can afford so get a pre-approval letter from your local mortgage broker and give it to your agent ahead of time. Do keep in mind that many homes are selling over their list price right now so consider looking at homes slightly lower than your max budget just in case you need to make an offer higher than the asking price or if you want to use an escalation clause.
- Be ready to pounce! Generally, you’ll want to take a look at new listings ASAP so be as nimble as you can with your schedule. Many new listings are postponing offers for several days to give as many buyers as possible the chance to view it and make offers, but don’t count on that extra time.
- 85% rule! Sorry, but the perfect house is probably above your budget. This is kind of a downer, but true. Most of our tastes tend to be out of our price range, so if you find the “85% house,” that’s likely to be as close to perfect as you’ll get. The sooner you can embrace that idea, the less frustrated you’ll be.
- Don’t over think it! After looking at a few homes and taking the 85% rule into consideration, you’ll know if one “just feels right,” so try not to wait until the last minute to decide to make an offer. This does not mean that you shouldn’t do your due diligence and make sure the home and neighborhood are what you expect, but the sooner you can start that process, the better.
- Pick your buyer’s agent wisely! When I’m a listing agent reviewing multiple offers with a seller, you’d be amazed at how often I either get hand written or sloppy contracts with pages missing, etc. In this computerized day and age, there is no excuse not to have a clean well written contract that hasn’t been scanned or faxed 15 times to the point of illegibility. Unless there is something extraordinary about the terms of the offer, all things being equal, these will definitely fall to the bottom of the list. Essentially, the listing agent may penalize a disorganized buyer’s agent (and therefore you) if he or she thinks choosing that offer could lead to challenging closing process.
- The fewer contingencies, the better! Most buyers need to have a financing contingency, but many of the others, such as inspection, title, neighborhood review, etc., are not always necessary. Again, I’m not saying that you should skimp on your due diligence, just try to do as much of it upfront as possible prior to submitting the offer. That is not always practical, but talk with your agent about what you can do to make your offer stand out.
- Personal letter? Consider writing a personal letter to the seller of the home. If the owner has lived there a long time, there is undoubtedly an emotional attachment to the home so it never hurts to try and appeal to their sensitive side. One caveat: be sincere! If you make stuff up and sound too cheesy, it may do more harm than good.
Remember, these are tips for buyers who know that they are going to be up against competing offers. In a slower market, or less active price ranges, you may not need to limit your contingencies, for example. But, if you visit an open house and there are 20 other families looking at the same time, you may very well need to dig into this bag of tricks. Happy house hunting!