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.
Almost all my listings this year have sold in multiple offers. That was something to brag about several years ago, but now it is pretty much the norm if the house is priced right from the beginning.
One listing had 7 offers the first day on the market. Everybody wants the same house these days.
Since only one buyer can get the house, that means that there are others buyers who lost out. It’s a tough time to be a buyer.
Since my work is almost always split 50-50 between sellers and buyers, want to know how to get the house you want and send all those other buyers off to fight over another one?
- To begin with, go in strong. There is a difference between overpaying for a house and offering 100% of what it is worth. An agent should look at the comparable sales and know the value. You are going to pay top dollar for any decent property right now, so write an offer that the seller is likely to just accept. The more time you waste on negotiating gives other buyers a chance to take the house from you. Your battle is with the other buyers, not the sellers. On my listing with 7 offers, we didn’t even consider any of them that had a contingency to sell or those that came in less than full price. When you have so many good choices, a buyer can often be rejected over something minor. When I have the buyer, I like to ask the listing agent how they want to receive the offer. Most of us use an electronic signature program, but some agents don’t. I mainly ask to show that I am going to be easy to work with. Keep in mind it is like speed dating for the listing agent-they only have so much time to deal with each offer and the buyer’s agent. I want to make it as easy as possible for them to pick my client.
- Don’t do anything wonky. If the seller didn’t offer to leave their curtains, then don’t ask for them. Don’t ask for early possession. Don’t ask for more time than is normal for the inspections to take place. This market is not one where you test the seller….unless you want to remain homeless. A good, clean, simple offer is what all listing agents are wanting.
- Think like a seller. Most sellers these days expect to get around full price for their houses, some even get a little more. Believe it or not, few sellers actually care about the absolute highest offer. Usually, the highest offers are really close, so what becomes important are the secondary terms. The seller is concerned about your financing, so have a preapproval letter from a reputable lender. They care about how the inspection goes, so schedule it as soon as possible. The less time they have to worry about that, the better you look. They care about the closing date, so be as flexible as possible. I always ask the listing agent when the seller would like to close. A lot of the time the seller has another closing to coordinate.
You know, I’ve been doing this for 11 years. It is still awkward for me to write this advice. It wasn’t too many years ago I was telling sellers how to attract buyers in a tough buyer’s market. I was telling buyers how to bring a seller to their knees and beg you to buy their house for probably less than they paid for it. Times change though, and this is where we are now. And this is what you’ve got to do to get a house today.
Had a client who wanted to see a house this weekend. Called the listing agent. The place already had 3 offers on it. That is happening more and more these days. So much so that I thought this might be a good time to talk about how to WIN in multiple offers.
Most people think in terms of outbidding somebody. Sure, more money is always nice, but when there are two offers that are very close in the offer amount, I normally see a seller look to secondary things. If Buyer A and Buyer B are $1000 apart, most sellers start asking things like:
- “How solid is their financing?”
- “When do they want to close?”
- “How much of a down payment do they have?”
The seller then picks whichever buyer seems most likely to get this deal to the closing table.
What are some things you can do to make your offer more appealing in this situation?
- Inspect the house, but let the sellers know you will not be asking for any repairs. ALL sellers hate doing repairs. They are too busy packing to deal with it. Most of the time, a seller just does $500-1000 worth of repairs anyway, and they usually don’t care much about how well the job was done. It is just something they want to cross off their to-do list. Just do those yourself and brag to your friends how you beat the other buyers and got the house. IF the house is a hot mess, you walk away from the deal after the inspection just like you would have done anyway.
- Find out when the sellers ideal closing date would be. If possible, give them the time that is best for them. Sellers are under their own stress from moving and packing. Making it easier on them makes you more attractive to them.
- Let’s face it. If you are in multiple offers and really want the house, you are already going to your max offer…may as well add some personal stuff in a letter to let the seller know how much you like the house. Sellers usually love their house and want to see it go to somebody that they think will love it too. In multiple offers, you have no room for negotiation so I see nothing wrong with showing your cards as long as it benefits you.
- And some stuff that seems obvious: Don’t ask for personal items like the seller’s grill or patio furniture. Don’t ask for things that were not listed as coming with the house. Don’t try to pressure them to respond quickly because in multiple offers, it is their world and you are just living in it.
This is soooooo different than it was several years ago when I was blogging about how to squeeze the desperate seller out of every last penny. Times do change. Sometimes you are the bug and sometimes you are the windshield. That’s why it is always important to buy a house that will be desirable in both a good and bad market.