The current real estate market finds the majority of buyers frustrated and scrambling to get under contract on a home. Last week we listed two homes, one in Burlington and one in Graham first thing in the morning. Before I even had in the sign in the yard on the Burlington house, there was a woman in the driveway waiting for her agent. She approached me and said, “You don’t have to post the sign, we are going to buy this house!” We talked briefly about her situation and how many houses she and her husband have lost out on. She wakes up at 5:30 in the morning to get her kids out of bed and ready for school and the very next thing she does is search for new listings in her price range, hence her being the very first showing before the sign was even up. For the house in Graham, we decided to hold an Open House in the evening, the first day of listing. 18 different groups came through between 5 and 7 pm. These two situations are perfect examples of the frenzy of the market and it brings us to the inevitable melee that ensues…The Multiple Offer Situation.
As a buyer, if you submit your offer and then hear back from your agent that the seller is calling for “Highest and Best Offers” then you know the competition is on. You can either pull out all the stops and do everything you can to make your strongest offer or you can decide to drop out of the race. If you want that house come hell or high water, there are several things you can do to make your offer more appealing.
Most obvious is to offer as much over the asking price as you are willing to pay. Keep in mind that if you win the contract and the house does not appraise, you will be in a new negotiation with the seller and they may be unwilling to come down to the appraisal price if they think there may be other buyers that will pay the difference because of how frenzied the market is.
You can offer the seller a high Due Diligence Fee to be competitive with other buyers. This amount, by check, goes directly to the seller and buys you the time to investigate the property during the due diligence period and potentially terminate the contract for any or no reason. This fee will then either go towards the purchase price at closing, or if you do terminate the contract, the seller gets to keep that money as payment for the time the property was off the market.
Write a letter to the seller explaining why you love their house and want to be the new owner. Seriously, we have seen this beat out “better” offers because it may hit home in some way with the seller. You never know!!!
Another tactic we are seeing recently that is new to our area’s market is the Escalation Clause. Without getting into what this entails (it’s a whole post on its own), let me just tell you this is such a contentious and somewhat controversial addendum to an Offer to Purchase that the Real Estate Commission is looking at possibly disallowing it for future use.
If you are currently a buyer that has been struggling in your search to find a home, you are SO not alone! Make sure to have a detailed conversation with your agent about what you can do to make your Offer to Purchase stand out and be the winner. Also be sure to talk to your lender about your finance options. There are many different types of loans that may apply well to your financial situation and a good lender will have plenty of suggestions to help get you into the best financial shape before you even make an offer on a house. Give me a call or an email if you have any questions about these topics and I can help you get where you need to go!