The shortage of homes for sale continues. Home buyers need to get ready to compete with other buyers as homes in many price ranges and neighborhoods will get multiple offers.
Serious buyers will need to put their best foot forward and make their first offer their best offer in a multiple offer situation because they may not get the chance to negotiate. Home buyers who are not pre-approved for a home loan can not buy a home unless they can pay cash. Get pre-approved before you go shopping.
Often home buyers imagine scenarios where they offer X amount and sellers counter at X amount and they end up getting the house for the amount they had in mind. It is best to go into negotiations with an open mind and realize that in the current seller’s market homeowners are calling the shots.
The best offer isn’t always the offer of the most money. Financing is important too. Buyers who are putting more than 5% down may have an advantage. Cash buyers may have an even bigger advantage. More cash in the mix means that there is a greater chance that the loan will close.
Closing dates matter. homebuyers who are inflexible will have less negotiating power. The best strategy is to ask your agent to find out what the sellers have in mind for a closing date. Sellers who need to move into a home that they have an offer on may have to pass on an offer that is 110% of the asking price with a closing in 90 days or maybe the offer is perfect for them.
Flexibility on possession date and time can be important. I have seen situations where sellers need to move out of one home and into another on the same day that they are closing on both the sale of their home and the purchase of another. Not an ideal situation but it happens. Buyers who can allow the seller a little more time to move out can have an advantage in a multiple offer situation that doesn’t cost them a dime.
The amount of the offer is important. I have never seen a lowball offer win in a multiple offer situation. If the home just came on the market today the seller may not be ready to consider a less than full price offer.
When the perfect home comes on the market it may be sold by the weekend, be ready to make an offer now. Have a pre-approval letter ready. See the home as soon as you can and make an offer or let your agent know you want to make an offer as soon as possible. Sometimes sellers will wait a few hours or even a day for an offer even though they have others if they know the offer is coming and the reason for the delay.
Assuming that the sellers have a lot of money that they can contribute to closing costs is a mistake. Sellers who owe a lot of money on a home may not have the resources to pay the buyers closing costs. An offer that does not require a seller contribution may be more attractive to a seller even though it is for less money.
Last year some buyers were skipping the home inspection to make their offer more competitive. I never recommend such a strategy.
Work with an agent who is prepared and who can quickly write an offer and one with a lot of experience in multiple offer situations.