3 Ways to Win Multiple-Offer Situations in a Seller’s Market
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I’ve talked about how to win in a bidding war before and that was a lot on the mindset for the buyer. If you’re getting ready to purchase a home and you’re a first-time home buyer or maybe you’re making a lateral move, if you haven’t moved in a while and you’re facing this seller’s market, I’m going to give you three tips for how you can win in a multiple offer situation.
These are tactical and practical and this is exactly what’s going on right now in this market. How do I know what allows a buyer to win in a multiple offer situation? I’m also a listing agent, so I receive offers and I track those results, so I can deliver my sellers the best price, the best terms, the best situation for them. That gives me insights into what it takes to actually win versus what it takes to lose. So today I’m going to give you three winning strategies. There are more, in fact there is multiple. If you want to know more about that, of course, connect with us.
Go BIG on your earnest money deposit
Number one, now this one may seem counterintuitive, and it may not be something that you have been informed to do before. There’s something called an earnest money deposit, sometimes it’s called a good faith deposit. Essentially it’s a pre down payment, and it’s commonly misconceived. People don’t understand what it’s for, why we should do it, or why it’s a good idea to put a big EMD, so here’s the strategy. Go big with your earnest money deposit. It’s actually a part of your down payment. If your down payment is say 10% of your purchase price represents about $30,000.00 or maybe $40,000.00 or $50,000.00, realize that that is what your earnest money deposit is. Your down payment is sitting in your bank account, ready for the closing in 30 days. Most agents misguide their buyers, or the buyer had their own preconceived idea about how much that earnest money deposit should be, so they will put down $1,000.00 or maybe $500.00. We’ve seen that. Knowing that money simply slides over from the buyer’s bank account over to the escrow company or the title company while it waits for the closing, that should be a good enough reason to have you do that upfront. Why is that important? Because if you have a big EMD, you are showing the seller that you are serious and you’re more serious than the other buyers that put down a measly $1,500.00 or $500.00. So go big with your earner’s money deposit. You get it back if inspections don’t go well after all, right?
Be flexible on the closing date
Number two, timing. Flexible closing date. If it doesn’t really matter to you as the home buyer, if you’re good where you are at, an apartment or maybe you’re living in a situation with mom and dad, and you have all the time in the world. A lot of times for sellers, they’re trying to navigate from Home A to Home B, and timing is a critical piece of that. So if it doesn’t really mean much to you, giving that seller flexibility will go a long way.
So go big with your earner's money deposit. You get it back if inspections don't go well after all, right?
Let them choose a closing window. So say buyer will close any time between this date and this date, thereby giving the seller some flexibility and stress relief. Same goes with post-closing occupancy, we call it an occupancy period or possession date. If you can stay where you are for a period of time and it doesn’t really cause you any strain, then give the seller 30 or 60 days after the closing, if they need it. It’s up to your agent to talk to the listing agent to find out if this is something that’s important to the seller.
Offer as much as you can . . . understanding the numbers
This brings me to number three, and it’s no surprise I’m going to mention this, but at the end of the day, the seller is going to look at offers with higher prices most of the time, and when I say most of the time, sometimes it’s a price that is not going to appraise anyway so the seller would be not inclined to look at it. But money speaks, right? Money talks and you know what walks. So here’s my advice for this one. Pay as much as you can and really understand the numbers. Know that it doesn’t cost you that much more per month. This is why you really have to know your numbers. For every thousand dollars that you finance, it’s about three dollars on the payment. So if you go up $10,000.00, $3.00 for every $1,000.00, that’s $30.00 a month. So what if you went up $30,000.00 over what you thought you might want to initially? That’s $90.00 a month. I have not yet met a buyer that would want their dream home to slip through their fingers over $90.00. Keep going with this and you’ll see that it is far more affordable because interest rates are so low right now.
Those are three strategies that I’m going to give you. If you want to go deeper on how to win in multiple offer situations, this is something that we’re doing every day for our buyers at Yoder Real Estate. We’re getting our buyers the keys at the closing table. We’re getting them in the home where other buyers unfortunately are standing on the sidelines with regret because they don’t have the right strategy. So we’re here to help you win in this market, give us a call if you’d like to know how to put these strategies into action today. I’m Kevin Yoder with Yoder Real Estate and we are here to help you with this market, that market, any kind of market, and we look forward to connecting with you soon. You can find us online at yoderrealestate.com.