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Multiple offers

Asked regularly by several agents about how to help their clients structure their offer when faced with multiple offer situation.  My thoughts in current market conditions (limited inventory available) to have strong earnest money, strong pre-approval letter, consider not asking the seller to pay closing costs in order to give the seller a better net on sale, & finally if your client wants to offer above list price - ask them early in the offer process, "what do you plan to do should the appraisal come in below your sales price?"  They have three options with an appraisal contingency - ask the seller to reduce the sales price, pay the difference, or offer to split the difference with the seller.  What else comes to mind with multiple offers for you and your clients? 
  • July 16 2013 - McDonough
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Answers (1)

Great post, Kelly.

A few additional comments I can offer. To win in a bidding war everything matters. Price is only one factor amongst many. Yes, it is the most important but sometimes there is a pile of contracts and you really need yours to stand out to have a chance.

There is a hierarchy to finance terms. Cash is king. If you can pay cash do it. If you can't pay cash but can go conventional do it. FHA and VA borrowers are considered higher risk to listing agents and sellers. Sellers will often take a $240k cash offer over a $250k FHA loan offer.

Make the inspection period short. Don't make it so short you run out of time to do your due diligence, but go with a shorter inspection period than your competition is probably going with. Commit to getting it done in a week.

Don't ask for seller concessions or home warranties.

Don't add weird clauses on the contract.

Type it.

Make it clean and simple.

What dollar amount do you think the other bidders will offer? if the list price is $150k and you don't want to lose the house and are convinced you're wanting to offer $160k...offer $162,250. Pick an odd number so that you dramatically reduce the chance that you'll bid the exact same number as someone else. And always go slightly higher than whatever you're thinking.

The FL market is on fire but my buyers are winning in bidding wars. The appraisal will pull the price back down if need be. But only the offer in 1st position has any chance of buying the house. This isn't The Price is Right. Bid higher than everyone else or you lose. when the appraisal comes in lower you can negotiate with the seller and usually get the contract price dropped to appraised value. Or maybe you'll split the difference and come to the table with more money. You won't have the luxury of picking one of those options if you lose in the bidding war,
  • August 12 2013
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