Low interest rates coupled with lower-than-usual home inventory has created a market where newly listed homes are selling like hotcakes. Consequently, these newly listed homes often receive multiple purchase offers, which is excellent news for sellers. But for buyers, having multiple offers is not excellent news. If you’re getting involved in a situation where your offer may be one of many, it’s vital to have a great real estate agent representing you who has experience with multiple offer situations. Here we share four important tips to assist buyers in multiple offer situations.
1. Make a Strong Offer
In a multiple offer situation, don’t low ball! Yes, it’s frustrating to lose out on a home, but expecting a low ball offer to be accepted is just wishful thinking. If you’re in love with a home and there are multiple offers, you need to know that you’ll only have one chance at scoring the house.
If you require seller contributions, you need to be aware that it’s a “give-and-take” situation. If you need $5,000 in seller contributions, don’t expect to offer $5,000 below the listing price and also get the contribution from the seller, especially in a multiple offer situation! If you absolutely need seller contributions, consider offering above the asking price, keeping in mind the home needs to appraise for the purchase price.
2. Have Fewer Contingencies
You have the option to make a purchase offer contingent on several different items, and some are more common than others. In a multiple offer situation, not having as many contingencies can make one offer more desirable to sellers than the next. While it’s not recommended to waive the opportunity to perform a home inspection, some sellers will just eat that up. The purpose of a home inspection is to ensure the home’s current state for the buyer. By waiving a home inspection, the seller is now “off the hook” for any repairs that would be requested after an inspection of the home. This doesn’t mean you shouldn’t have a home inspection completed—you just don’t have to leave the seller on the hook for repairs.
3. Get Pre-Approved, Not Pre-Qualified
There is a major difference between being pre-approved and pre-qualified! Understanding the difference is extremely important.
A pre-qualification is when a lender looks at your financial picture based on what you tell them. In most cases they will look at your credit information to make sure your credit scores are in line with the current mortgage guidelines. The lender will then issue a“Pre-Qualification” letter, subject to verification of information once you apply for a mortgage.
A pre-approval is a little more involved but is much more desirable when it comes time to negotiate on a home. Getting a pre-approval includes a lender pulling your credit report, collecting pay stubs, bank statements, W-2′s, etc. and actually confirming your employment status. Most pre-approvals are as good as a mortgage commitment, and are generally only subject to an appraisal being done on the property.
4. Make a Large Down Payment/Escrow Deposit
Putting a large percentage down towards a home can give you a distinct advantage. Although the amount of the deposit can vary, a larger deposit can indicate your serious intent to purchase the home to a seller and can also indicate your strength.
At Title Junction we care about helping you stay informed throughout your real estate transaction. Have questions? Give us a call at 239.415.6574.
In case you missed it, check out our last Title Junction post: What’s a Credit Score?