The real estate market is getting increasingly competitive for home buyers. But it’s not true for all homes. Neighborhood homes that have been selling the quickest and for most money are the homes that fill the discerning home buyers’ need for a turn-key home. You can count on these homes attracting many home buyers, as well as multiple offers. These situations can be frustrating, but being prepared can possibly increase your chances of winning the multiple offer scenario. Many home buyers need not come up empty, confused, and frustrated when they encounter multiple offer situations. Here’s a home buyer multiple offer survival guide.
The Home buyer’s survival guide to multiple offers
When confronted with a multiple offer scenario, you must understand the seller is in the driver’s seat. This is a hard pill to swallow for many expecting it to be a buyer’s market. But for the homes that show the best and are priced the best, you should expect competition from other home buyers. Giving up the expectation that you’ll be able to negotiate a contract on your terms will help you in formulating a competitive offer.
Although you may not realize it, your emotions guide much about your home buying decisions. Formulating your offer for a multiple offer situation will be more sound if you stick to the facts. Focusing on the facts will help you stay focused on the larger picture of buying a home. Using data and facts can also help you be more persuasive when you present your offer to the seller.
Home buyer multiple offer survival guide on the housing market
Understanding the local market can be a major plus when putting your offer together. Housing trends can influence home buyer competition and price. However, understanding your limitations can help your home buying strategy too. You may be limited in the amount you are willing to spend, the type of mortgage for which you qualify, your closing date, and a number of other issues that may affect the terms of the contract. Don’t be discouraged if you think your limitations may lessen your offer’s attractiveness when it’s compared to others.
Certainly, don’t get caught up in media reports on real estate. The housing market is a hyper-local phenomenon. Regional markets are different and have different sales trends. Locally, even neighborhoods may differ significantly. Be prepared with local market information, as well as your limits.
Home buyer multiple offer survival guide on financing
The general consensus when competing with multiple offers is to put your best foot forward. Decide on the best price you feel comfortable paying for the home. Cash deals are difficult to compete against. However, you can beat a cash deal if your offer has a higher price and your lender has provided you a very strong approval letter. If you didn’t meet with your lender prior to looking at homes, make an effort to provide your lender with all necessary documents for them to provide you an approval letter that is only subject to underwriting and appraisal (or the equivalent). The stronger the lender letter, the more confidence the seller will have in you to complete the transaction without delays or hiccups.
Haven’t met with a lender yet? Start your own mortgage file with basic items the lender will need from you. Your lender will need recent pay stubs, W-2 statements, bank statements, 401k statement, and any other financial information you think you may need (which may include child support or disability income). Self employed individuals will need whatever documentation they can muster (including tax returns) to support their declared income. Being organized will facilitate the mortgage process.
Home buyer multiple offer survival guide on contingencies
Try to keep your contingencies to a minimum. There may be some contingencies you may be able to avoid, and some may be necessary. You must consider contingencies carefully and soberly, as they offer some protections if you can’t (or don’t want to) move forward with the purchase.
Home buyer multiple offer survival guide on home inspections
Although some agents suggest skipping the home inspection contingency in a multiple offer situation, I do not recommend that. Many homes have deferred maintenance that can lead to costly repairs. Even renovated homes that appear to be in good condition can have major issues which can go unnoticed. Instead of skipping the home inspection, try to have a short inspection period (have the inspection scheduled ahead of time). Some home buyers have an opportunity to conduct a pre-offer home inspection. This allows them to eliminate the contingency from their offer, as well as knowing the general condition of the home.
Home buyer multiple offer survival guide on finding homes
If you’re finding multiple offer situations too intense, try to find homes that have little or no home buyer competition. Ask your agent about finding homes that are not listed in the MLS. Some agents already seek out such homes. Alternatives could be For Sale By Owner, bank owned, auctions, and even farming specific neighborhoods for owners ready to sell. Your agent can also search through expired and withdrawn MLS listings to find homes.
There are a couple of disadvantages to looking for homes not in the MLS. Although you may reducing the home buyer competition, you may encounter competition from real estate agents looking for listings. Additionally, finding a willing seller of home you desire may take some time.
Copyright© Dan Krell
Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.