What do you do if you’re trying to buy a home in a multiple offer situation?
First, it’s important to remember that roughly two years ago, about 40% of all deals involving multiple offers would turn into bidding wars. Now, that number is closer to 15%. The only case where you would find yourself in a multiple offer situation is when the seller has deliberately priced their home below market value in an effort to generate those multiple bids. So don’t let yourself get hamstrung by the asking price.
We have a bifurcated market right now. Above the $3 million mark, you’ll have a lot of negotiability. Below $2.5 million (and especially in the six-figure range), the market is red hot. There, the average days on market for homes that are priced well is 30 or less, and odds are you’ll encounter multiple bids for your favorite properties.
The most important factor in making an offer in a multiple offer scenario is being confident in the comps and having a conversation with your broker about what direction your submarket is moving. That way, if the home is underpriced, you know it and you can be confident in bidding aggressively while also feel comfortable you’re not overpaying.
"Don’t let yourself get hamstrung by the asking price."
Two years ago, being in a multiple offer situation meant you would have paid above the asking price 100% of the time. Now, you can still get a home that has four or five offers on it for its original asking price.
There are other things you can do besides offering more money to win in a multiple offer situation. An introduction letter to the seller, for instance, can be priceless. It should include your picture (preferably one of you outside in the neighborhood with your spouse and/or family) and a short biography of yourself. That can go a whole lot farther than an extra 1% on your offer. Also, let’s be honest—sellers love babies, so if you can mention a baby in your intro letter, that matters.
If I’m selling a home in a multiple offer situation, what I’m most afraid of is that someone will come at me with a non-binding, high number, hijack the process, and then want to renegotiate or even back out once we’re in the due diligence period but before anyone has signed the contract.
All of these things will send signals that you’re trustworthy and you’ll follow through with the sale. Not only that, but you’ll also give the seller peace of mind with your offer.
If you have any other questions about how to win a multiple offer situation as a buyer or you have any other real estate needs, don’t hesitate to reach out to us. We’d be happy to help you.