Multiple Offers On The Same House
“Shut up and take my money!” That’s a funny retort you might see on social media platforms when they’re advertising something so amazing, so ‘must have’ it defies the ability to negotiate.
The same can be said when it comes to today’s housing market and the oft-waged battle of ‘multiple offers’. Clients have found the perfect home, they want it yesterday, and the only thing they want is for the seller to take their money. Problem is, so do the 10, 15, or 20 other people on the list – who’ve made increasingly enticing offers – for the same property.
Because it’s entirely possible that you can represent both sides of that coin today (an inspired buyer and a confident seller), let’s look at what multiple offers can mean for each type of client.
Putting Your Buyer’s Best Foot Forward
Buyers are no doubt going to be extremely motivated to find that perfect home. Either frantically or diligently (depending on the market), you’ve tackled the first issue and found something they’ve fallen in love with. Now, the offer….
- Bring Cash – “Buying a house ‘with cash’ can benefit both the buyer and the seller with a faster closing process than with a mortgage loan.” – Rocket Mortgage. It’s so atypical, though, that roughly 87% of purchases are financed. Of course, we all know that buying a home with cash isn’t possible for a lot of folks, but it can vault your client ahead of someone relying on being approved for a loan – even if your offer is lower.
- Get Pre-approved – There’s nothing worse than your client finding what they want, and then not being able to actually PAY for it. Know going in what they can afford, and where to stop negotiating.
- Counter – Stay in the game as deeply as you can without overplaying your hand. Some of those other offers will die on the vine or they’ll be eclipsed by continuous updates. “Some buyers will be turned off by the aggressive negotiation strategy and walk away from the situation.” Use their apathy to your advantage, and be patient.
Eenie, Meenie, Miney, Mo
The seller has found themselves in a position that is both enviable, and delicate. Lots of people are putting their homes on the market, and in short order receiving the kind of offers they might not have imagined. How to pick the winner?
- Earnest Money – Get it. No matter how good a deal might look on paper, any number of pitfalls can tank a deal. “The higher the [EMD], the stronger the offer.” It behooves you to sell when the market is hot. If the deal on the table falls through, the EMD (1%-3% of the home’s price) can be a consolation prize for the homeowner and buoy them as you re-list – or contact a previous offer to inquire about their interest.
- Contingent, Contingent, Contingent – Play contingencies to your advantage and walk away from the unreasonable. Title, sale, appraisal, financing, & home inspection…all of them add to the uncertainty of a quick sale if the buyer’s plan or financing or whatever runs afoul.
- Evaluate – There’s a great deal of importance placed on understanding the entirety of an offer, versus just picking the highest price. Yes, you want the homeowner to get the absolute highest price that’s ethically obtainable. But making sure the entirety of the deal (from down payment, to how the home will be purchased, to waiving off crazy requests for either time or contents of the home or post-sale extras) is paramount.
Selling a home $100,000 over ask is a great problem to have, especially if you’ve waded through a ton of competing offers to get there. Similarly, beating out the competition for a prized piece of real estate by offering $100,000 over ask can be great (although I feel a little faint at that kind of overvaluation, even by today’s standards). Using platforms that allow you to automate your real estate postcard marketing campaigns can allow you more time to focus on your clients needs.
Multiple offers on a home can be viewed as a double-edged sword, depending on what side of the blade you happen to find yourself. Thoughtful approaches to both buying and selling in the case of multiple offers can be exhilarating.
There is a ‘bubble’ for every commodity, and at some point the market will cool down and the craze of multiple offers will diminish (it will never be eliminated). “Realtor.com reports that while new listings are still well below the number of homes placed on the market in early 2020, the gap is beginning to shrink. For the week ended March 20, new listings were down 14 percent compared with that same week in 2020, which is a smaller gap than the 24 percent reported the previous week. Still, Realtor.com reports that because homes are selling fast and fewer homes are being listed for sale, the total number of homes for sale (including new listings and previously available homes) is 52 percent lower than in 2020.”
Resource Links:
https://www.homelight.com/blog/multiple-offers-on-a-house/
https://www.washingtonpost.com/business/2021/04/14/buyers-2021-need-more-cash-face-more-competition/
https://www.rocketmortgage.com/learn/buying-a-house-with-cash
