Winning in multiple offers

Two of the three houses I sold last weekend had multiple offers.

I’ve always said that what often wins a house in these situations has nothing to do with price.  It is even more true in today’s market where almost every house sells for full price or slightly above.  I know when I get multiple offers on my listings, it is amazing to see several different buyers all offer roughly the same amount, especially when it is over the list price.

The first one I sold was a for sale by owner townhouse.  I knew the seller probably didn’t know what to do once he got an offer, and probably didn’t know how to determine which buyer was the best.  So, I told him that I would handle everything for him and keep him in the loop on the progress of the sale.  I also pointed out that my buyer had 20% down and was doing a conventional loan. I told him all the things that could go wrong with any sale, and that short of a cash buyer, my well qualified buyer would be the best one to pick.

And he did.

The other one was a hot new listing near Hamburg in the most competitive price range in Lexington.  There were 9 showings the first day on the market.  My buyers needed to roll their closing costs into the offer, so I was a little worried.  I knew the only chance I had of getting this place for my buyers was to find out how to make it easy on the sellers to say yes to us.  I asked the listing agent if the sellers knew where they were moving yet.  If they did not have a house yet, my people could have rented back to them after the closing because they had several months left on a lease.  The sellers have a contract on a house in a surrounding town.  I got their closing date.  I remembered that they had two small kids based on the way two bedrooms were decorated.  No seller who is going to be a buyer likes the idea of moving out of their old house, closing it, closing their new house, and moving in….all in one day.  Especially with kids.

We wrote a strong offer.  I put our closing date the same day that the sellers are closing their new home.  We also offered to let them have their old house for 48 hours after the closing just to make that process easier.

Later that day, the listing agent called me.  She said both offers were practically the same.  So much so that her sellers jokingly asked her if she had told both buyer’s agents what to offer.  They couldn’t decide which offer to pick, so they asked their agent what to do.   She advised them to accept our offer because she thought I was so nice to work with and for my concern in making the process easy for her sellers.  Well, I am a nice guy, but my goal was to get this house for my buyers more than it was to make it nice for the sellers.  That is just what we had to do to make our offer the most attractive.

So, both of my buyers got the house they wanted in multiple offers.  Like I’ve said before, it isn’t always about price.

How to buy when you also have to sell

The market is full of people who know they can sell their old house in a heartbeat, but are worried that they won’t be able to find a house to buy…..so they do nothing.

Here are a few options for you:

IF you absolutely have to make an offer contingent on selling your old house, have the old one ready to list as soon as you make an offer.  The listing agent for the house you want to buy will want to see it on the market ASAP.  Many people focus on finding the right house and have done no prep work on their old house.  They often end up losing their new house.  Any decent agent will counter your offer with what is called a “Kick-out Clause.”  That means that if another buyer comes along without a contingency, you either need to step aside or remove your contingency and buy the house.  If your house isn’t ready to list, or isn’t appealing enough to sell immediately, odds are you will lose your new house.  I know it is tough, but the best thing to do right now is focus on getting your old house ready to sell, THEN go look at houses.  And every client I have in this situation is going to think I am talking to them when they read this, but I am talking to ALL my clients in this situation 🙂

The absolute best thing to do when you need to sell first is to…..just sell first.  Yes, I mean sell your old house and find somewhere to live temporarily.  Will it be fun?  Heck no, but you will get top dollar for your old house and be in the best bargaining position on the new one since no seller today really wants to accept a contingency offer.  If a seller accepts one, it is usually a sign that you are paying waaaay more than the next highest bidder and/or that you have selected a house that is having trouble selling in the hottest market ever.  Neither of those are good.

IF you can buy the new one without having to first sell the old one, then do that.  You know you will sell the old one quickly and it is really nice to be able to get the new one ready before moving in.

But what if you can qualify for the new house without having to sell, but you really want or need your equity from the old one for a down payment?  Easy.  Get a home equity line of credit on your old one and use it for the down payment on the new one.  Sell the old one and pay it off.  It’s a simple way of moving the equity you have from the old house to the new one.

Want to know what BUGS me about a house?

You know what scares me when I see a house for sale and the seller has lived in the place for a very long time?

Termites.

For most people, the only time they think about getting termite inspections are when there is a sale involved.  While I don’t think you need annual inspections unless you just want to help your pest inspector generate revenue, you should do one at least every few years.

I was in a house last weekend that my buyer is considering making an offer on.  Well, I guess they are still interested.  I haven’t heard from them since I pointed out all the termite damage.

And there was a lot of damage.  Fortunately most of it would be easy to fix.  All you’d need is to sister a few new joists to old ones.  The damage didn’t look any higher than that.  I figure there is about $2-3k in work to be done.  A termite treatment back in the 90s would have been much cheaper.

As the husband and I were walking around in the basement using our phones to look at all the joists, he said “This is why we like you.”

Who knows if they will make an offer on this house.  If this isn’t the one, no worries.  I know I am their realtor.  I want to sell them the right house, not just any house.

 

How I won in multiple offers

I was working with a client for several months who was buying in Nicholasville.  The market there is even worse than it is in Lexington for a sub $200k buyer since there are only about 8 neighborhoods to choose from.

A great house came on the market.  I scheduled a showing.

I just knew this would be the one.  I checked out the recent sales in the neighborhood to get an idea about what this house was worth.  I even prepared all the docs my buyer would need to sign so we would be ready to go.  All I needed to do was fill in the offer price and have her sign it from her phone.

We looked at the house.  It was a winner.  I call to tell the listing agent that I just sent an offer and was told that there was already one offer on the table and another one was coming.

We revised our offer to be slightly over the list price.  I asked all my usual questions that can help with getting an offer accepted……When would the seller like to close?  Do they need delayed possession?  Would they like the inspection type where the buyer either takes it or leaves it after the inspection?  Other than price, what would the seller’s ideal offer be?

The seller didn’t need anything special, so I knew this one would come down just to price.

A few hours later I get a call telling me that the third offer arrived and it had an escalation clause.  That made me pretty nervous.

I tell my buyer this and suggest we also do an escalation clause.  I tell her that the default setting for most agents is to offer $1000 more than the highest offer, so we better do more.  Otherwise all we would accomplish was knocking out the third buyer.

She agreed to a number we discussed and that she would pay that much higher than any offer up to certain price.  The list price was $192,900 and all the offers were higher than that.

I was a nervous wreck all day.  I really wanted to see my buyer get this house.  It was perfect for her and she had been waiting so long to get a house.

Finally, I get the call that she won the house.  Turns out all the offers were $194k, and the other offeror’s escalation clause was the predictable $1000 that I suspected.

It was sort of funny for me because it was the first time I had ever called to tell a buyer they had just bought a house and they didn’t yet know what they were paying for it.  I tried to make her guess, you know, like she was a contestant on The Price is Right, but she was so anxious that she said “JUST TELL ME THE PRICE!!”

 

5 things buyers & sellers should know

As we kick off the 2018 real estate season, here are a few things buyers and sellers need to know:

Buyers:

  1.  Make your best offer the only offer you write.  Everybody wants a deal, but the odds of you getting a bargain are slim.  You want to give your best offer because the market moves fast.  Plan on negotiating with the seller and odds are somebody else will make an offer while you and the seller are going back and forth.  This is especially true if it is a new listing.
  2. Get preapproved.  You want the seller to want to deal with you.  In a slower market, they would have to deal with you even if they didn’t feel like it.  In a fast market, they know there is always another buyer out there.  Don’t make them wonder if you can buy their house.
  3. Don’t write a letter telling the seller about yourself.  Most of the time when I have gotten those, we have multiple offers and the seller never gets around to reading it until after they have sold the house.  And do you know what most of them say to me after reading it?  “If they loved the house that much, they should have made a better offer.”  You want your offer to stand out?  Let the seller pick the closing date if you can, or do the type of inspection where you can inspect it but won’t ask for any repairs.  The seller will find that much more exciting that seeing a picture of you with your dog.
  4. Don’t ask for anything that wasn’t included with the house.  Sellers think it is strange that you went shopping for their personal items.  Also, if you write stuff that wasn’t offered in the listing that the seller doesn’t want give up, you force the seller to counter your offer without those items.  Meanwhile that gives time for another buyer to make an offer.  You might lose the house because you were trying to get the sellers coffee table or patio furniture.
  5. Don’t try to rush the seller.  If it is a new listing, odds are they are getting multiple offers.  The saying is the squeaky wheel gets the oil, but in real estate that just means you are annoying the seller.  Most agents know that if you are annoying now, you will likely be annoying throughout the entire process.  Think of it like a job interview.  The seller has a big decision to make and is going to decide based on how you present yourself through the offer and your actions.

 

Sellers:

  1.  Usually your first offer is your best offer.  When I was a new agent, I was told this and really didn’t believe it, but 13 years experience in all types of markets tells me it is true.  I might alter the saying to say the first “Reasonable” offer you get is usually your best.  Occasionally I do see these crazy buyers who must be watching reruns of real estate shows from 2007 when sellers were desperate to sell…..but they aren’t living in reality.
  2. Don’t feel rushed.  Buyer’s agents like to do things like give you 3 hours to respond to their offer.  They do this hoping to get the house before anybody else does.  The truth is in this time of having more buyers than houses, that buyer isn’t going to walk away.  Only a few times in 13 years have I seen where a buyer has two houses they want and needs a fast response because they want to buy their 2nd choice house if it doesn’t work out with you.  They usually will wait though since your house was their 1st pick.
  3. Think about what is most important to you.  Everybody wants the most money, but sometimes a slightly lower offer that closes sooner, or lets you stay in the house for a few days after the closing, is appealing.  Also, think about what you will accept before you get an offer.  Most sellers don’t think about this until they get an offer and they have a lot of stress trying to process it.
  4. Don’t over price your house.  Your house will eventually sell for what it was worth.  Starting out with a realistic number accomplishes two things.  One, it makes the process go faster.  That means less time cleaning up your house and having to leave for showings.  Two, you create a bit of a frenzy when it is a new listing.  Buyers flock to new listings.  They are afraid of losing it and will likely make their strongest offer.  Once you get past that new listing period, buyers know there isn’t a risk of another offer and will try to negotiate more.
  5. That surround sound system you are so proud of?  Leave it off during showings.   It isn’t as important to buyers as it is to you.  Don’t stink up every room with Glade Plug-ins.  Buyers think you are covering an odor.  People with allergies just want to leave your house.  The average person can only hold their breath for like 40 seconds, and that is not enough time to see your house.  Keep your house the cleanest it has ever been.  Seeing those dried up specks of toothpaste in the sink is sort of like looking at used cars and seeing coffee stains around the cup holders or a french fry under the seat.

 

Happy buying and selling!