Just as you and your Realtor pull out of the driveway, you see that another Realtor is pulling in with clients who are also looking. You begin to break out in a sweat and a horrible feeling washes over you: what if they love it as much as I do?
Sure enough. By the time you get back to your Realtor’s office, the call comes in from the listing agent that an offer is on the table, and she is expecting another one within the hour.
So, how can you best compete in a multiple offer situation?
Make Sure Your Existing Home Is Sale Pending Or SOLD
Unless you are a first-time homebuyer or are “between homes” and living in a short-term rental while you shop, you likely have a home to get under contract before you purchase another one. When you find yourself in a bidding war, you have a leg up on the competition if your home is at least sale pending, or if you can provide a pre approval letter from your lender that states that your qualifications to purchase are not contingent upon the sale of your primary residence.
Write Your Very Best Offer
There is no time to “play the game” at this point. You are in a stiff competition, and if you want this home, go ahead and offer the top dollar you would feel comfortable paying for the home. After reviewing a comparative market analysis of this home with your Realtor, if you feel it was fairly priced (and it likely was priced attractively to have spurred multiple bids), go ahead and make a slightly higher than full price offer. There should be no need to go substantially higher than full price, and I don’t recommend it because you then run the risk of the home not appraising for the higher price.
Offer A Generous “Earnest” (“Good Faith”) Deposit
As the name implies, that good faith deposit is showing the Seller that you are a serious buyer, and that you do not intend to walk away from this transaction. By taking it up a notch, this will increase the chances that the Seller will take a more serious look at your offer. And the earnest deposit is part of your down payment.
Offer The Sellers Extra Time To Move
As thrilled as the Seller is to have two or more offers on the table, he is also a little nervous. Which one should he choose? Another way to shine above the other contenders is to offer the Seller a few extra days to move out, without asking for anything in return. Having the advantage to have the home solidly sold and closed before moving out may be a real stress reliever for the seller.
Don’t Muddy The Waters By Asking For Personal Stuff
Here in our Louisville, Kentucky area, it is not the norm for such appliances as the kitchen refrigerator or the washer and dryer to stay with the home. If you ask for all the appliances and your competitor allows the Seller to take them, this could be the very thing that kicks you out of the game. Ask your Realtor to check in with the listing agent to find out how the Seller feels. He may, in fact, want to leave them as a convenience to him. Knowing what the Seller is thinking will be very helpful.
Reach Out On A Personal Level
If the Seller has lived in this home any length of time, he may have an emotional attachment to it. Over the years I have heard so many Sellers say that it means a lot to them to leave their home knowing that the Buyers will love it and care for it the way they did. Write the Seller a letter. A sincere, heartfelt letter to the Seller will be well received, and may make the Seller choose you simply because you took the time to write him.
I know it is difficult, but try to brace yourself for the possibility of not winning the bid. You have made the Seller a great offer, have proven your ability to purchase, offered generous earnest money, given him extra time to move out, didn’t ask for a lot of personal items, and have written a personal note. You have given it your all.
If you don’t win the bid on this home, remember this: there is always another home. It may be hard to see that right away; go ahead and grieve the loss. But trust me on this: there really is another home waiting for you.
Best of luck, and happy hunting !