How Do I Make an Offer in a Competitive Bid Situation?
No buyers really want to have to compete against other buyers for a house they have fallen in love with and wish to buy. It’s tough enough just going through the offer process! And it’s pretty scary for first time buyers who have no experience with this real estate stuff!
But the reality is that in many markets, as a buyer you will have to do just that, so you probably are wondering how to go about it? The truth is, some of the things we’ll talk about are important to do in any offer situation, so listen up.
The multiple offer situation is a whole different animal, since you are competing against other buyers who want the same thing you do, as opposed to negotiating with the sellers alone. And sometimes you make an offer, the only one, only to find out a short time later you are competing.
But while it might not be your desired scenario, if you keep your wits about you, work with a strong Realtor who knows the market and can guide you on the issues to consider when making your offer, and are willing to put forth your best effort, there’s no reason to be alarmed. The toughest issue to face is the fact that there can only be one winner, and it might not be you! But why not approach it with the attitude that you CAN succeed?!
First, in a competitive market understand that you must move quickly! And to do that you must be prepared up front. Here are some ways to help you move fast in today’s seller’s market so you will be ready when the time is right to make an offer.
Your Realtor must help you understand the specific local market – what the inventory is compared to the buyer demand, and provide guidance around the key decisions that need to be made. While the offer amount is particularly important, there are other terms and conditions to consider that could make your offer more, or less, appealing to a seller with other offers in the hopper – flexibility around closing date, providing a rent-back period after closing, eliminating certain contingencies such as inspection and appraisal, and keeping the offer as clean and simple as possible. Your agent should find out what might make an offer’s terms and conditions most appealing to the seller.
With regard to offer amount you will likely have to think in time of asking price, or how much above it you are willing to go. This is not the time to go in with a lower offer, hoping to negotiate – you may not get a second chance so make your offer your best from the get go. One concern about over asking offers is that in the case of an appraisal for a loan, the home might not appraise, depending on comparables. Are you willing and able to pay the difference?
Your pre-approval should be thorough, detailed, and current, not 30 days old. And consider providing a Proof of Funds (POF) even if your lender has verified all your assets, etc. And have your lender standing by to answer any questions the listing agent might have (as long as they don’t violate confidentiality). Or have your lender call the agent once your offer has been submitted.
One last thought – dress your offer for success. That really is more the job of your Realtor, but you and your agent want to consider the first impression your offer makes when received by the listing agent and the sellers.
Here’s how to stage an offer, just like you would a house!
It’s helpful to go into a multiple bid situation with the right attitude - that you are doing your very best. But realize that your best may not be quite good enough, for one reason or another. Make sure that the offer you make is one where IF you succeed you don’t feel you overpaid, but that if you are not the winner you don’t regret not doing more.
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