These are some helpful ideas to be a more competitive buyer in a multiple offer situation.
Of course, many times the highest bidder or cash wins. However, this may not always be the case. Even a buyer getting financing may find with the right terms and conditions it could make the difference in to win the bidding war.
1. Get the Right Buyer’s Agent
Work with a full-time experienced Realtor with a proven record in the industry. A top buyer’s agent will know what questions to ask a seller’s agent in order to structure the purchase offer to give the buyer an advantage. The seller’s listing agent will know the offer will be clean and strong, they will trust the other side and they’ll know there is a less likely chance of complications to close on the property.
2. Pre-inspection
Lately, buyers have been doing a pre-inspection of the home in advance of the offer. This will allow them to waive the inspection contingency when making an offer. The pre-inspection is attractive to sellers because when there’s an inspection contingency in place, the buyer can terminate the agreement at any time prior to the inspection contingency deadline.
3. Waive the inspection
Some buyers waive the inspection contingency all together; however, we always recommend you do a home inspection. This avoids any surprises that may come up later.
4. Waive the appraisal
We are seeing some buyers with financing contingencies who opt to waive the appraisal contingency. This means that if the property does not appraise at the purchase price, the buyer needs to pay the difference between the appraisal and the purchase price at closing. Of course, sellers love this, but you do need to make sure you can afford to pay the difference in the event that the house appraises at less than the purchase price.
5. Solid financing
You will be a much stronger buyer if you have been fully underwritten and approved for a loan. This is stronger than getting pre-qualified or pre-approved thought the direct underwriting system. Your lender can help with this; if you need a lender referral, give us a call.
6. Cash is king
Paying all cash is always great for a seller as there is no financing or appraisal contingency. Next to this, a larger down payment, (20% or more) always looks stronger than a smaller down payment. Be willing to provide proof of funds for a cash offer or any down payment funds and closing costs funds you will need to close on this transaction. This way the seller truly knows you have the funds to close.
7. Waive financing
Even when getting financing, some buyers are waiving their financing contingency all together. They’re confident in their financing and believe the loan will go through. If for whatever reason, you could not get financing and waived your financing contingency then you would lose your earnest money.
8. Earnest money
A large earnest money amount is always more favorable. Some buyers are writing their earnest money check directly to the seller and upon mutual acceptance instruct the closing agent to release it to the seller as a nonrefundable deposit toward the purchase. This can show the seller you’re a serious buyer and are not planning on backing out.
9. Buyer closing costs
You will be more competitive if you pay your own closing costs rather than asking the seller to do so, which would reduce the amount of money they will receive at closing.
10. Offer your best price
Money talks! Pay the highest price you are comfortable paying. Or include an escalation clause with your offer that increases your bid by a certain amount above other offers. Just make sure you set a limit on how high your offer will go.
Only sellers love multiple-offer situations. But with these tips, you can rise above the pack and help put yourself in the best position to win the bidding war and get your dream house.
