8 Tips For Buyers in Competing Offer Situations
With the competitive real estate market conditions we are experiencing in the Collingwood area, the home buying process can be very stressful. After searching, you find the house you love only to find out you are in competition with other buyers to purchase the same property. While you can’t guarantee success, there are a few things you can do as a buyer to improve your chances in a bidding war.
- Show Good Faith. When you make an offer, your deposit shows good faith that you intend to complete the transaction. Consider making a larger deposit than what might be the norm in the market and price range. I recently had an offer come in on a home for $100,000. While that may be unusual, it certainly got the sellers attention. If $5,000 is normal in the marketplace, consider making a deposit of $10,000 or more. If your conditions are not fulfilled, the money will be returned to you and, if your sale becomes firm, the deposit forms part of your down payment.
- Make It Personal. A house is more than bricks and mortar. It’s a home where memories have been created and sometimes it is hard to leave. Include a short and heartfelt note to the homeowner telling them why you love their home and would enjoy living there.
- Get Pre-Qualified. It’s always wise to know where you stand with a lender for financing and while I maintain that offers requiring a mortgage should always be conditional on having financing approved, consider sharing a copy of your pre-approval with the seller.
- Always Have An Inspection. No matter how tempting it may be to “take your chances,” having a home inspection is almost always a must and sellers understand this. If there is enough time, consider having an inspection before making an offer so an inspection condition is not included in the offer. Beware: there is always the risk that you will pay for an inspection and still not succeed in buying the home.
- Every Day Counts. Most offers have conditions and before bidding wars, we usually saw conditions in our local market place running from 7-10 days. This poses a risk to a seller. If the buyer backs out at the end of the conditional period, the seller may have lost other buyers in the interim so shortening your time frames, reduces the sellers risk. If possible, shorten the conditional period and be ready to act quickly if your offer is accepted.
- The Terms and Other Details Matter. Things like meeting the sellers preferred closing date and forgoing a request for extra chattels beyond what is included, mean convenience for a seller and can make your offer more attractive than one that causes complications for the sellers.
- Know The Market. The multiple offer process in inherently unfair to buyers in that they are in a blind auction without knowing the terms and conditions of any offer they are competing against. This is the time to make your best offer in every regard but not one that exceeds market values. Remain calm, work with a great REALTOR® and be aware of the market trends and prices before making a reasoned offer. Just because the market is strong, this is not the time to over extend yourself and it is important to know your limits.
- Consider Making a Back-Up Offer. In the event your offer is not successful, you may wish to consider making a second offer that says essentially, that if the first offer fails to become firm (the conditions are not met in the accepted offer), then the seller agrees to accept your offer. I had two such situations in the last year and in one case, it was successful. The risk to the buyer is that they are “tied up” on that offer and prevented from purchasing anything else that may come up in the interim so this should be done with real caution.