Category: Home Buying

Multiple Offers – Competing Home Offers

Competing With Other Home Buyers in Multiple Offer Situations

A seldom discussed phenomenon often occurs when home buyers decide to write a purchase offer. This is how it goes:

Say you've been house hunting for weeks. You notice one home has been for sale almost six months without any offers. You figure the home is overpriced, and you might be right. But you go look at it anyway. You fall in love.

It's the perfect home for you, and you figure you can get a great price because the seller is undoubtedly desperate for an offer. This is your lucky day. So, you whip out the checkbook, write an earnest money deposit and and sign the purchase contract. Your buyer's agent then delivers the offer to the seller's agent.

That night you're dreaming about the home. You toss and turn, thinking about how you will arrange your furniture, which color you might paint the bedroom. The next morning your agent calls to say the house has been sold to somebody else.

How did that happen? You're astonished, then angry, and later, depressed. You wonder if the seller had a buyer in his back pocket all along. How did you get deceived?

You weren't. What typically happens — and I can't explain why — is the minute you want to buy a home, so do three other people. It's extremely common for the seller of a dated and neglected listing to suddenly receive two, three or more offers, all within minutes of each other.

Tip: When you find a home to buy, write your offer immediately. Ask your agent to call the seller's agent to find out if there have been recent showings and whether anybody else might be writing an offer.

Multiple Offers in a Buyer's Market (Today's Market)

In buyer's markets, the winning offer in a multiple offer situation is often less than list price. The number of multiple offers are generally considerably fewer, meaning you might be competing against one buyer in-lieu-of 20. Here are suggestions for competing:

Sell Your Exiting Home First.

If you are moving up and have a home to sell, don't buy before selling. If you're a first-time home buyer, you might already have the advantage over a buyer who needs to sell before buying. If one offer contains a contingency of sale, the seller will gravitate toward the offer without a contingency to sell.

Play Nice.

Don't ask the seller to give you personal items. Don't expect the seller to pay your closing costs. Find out which items are customarily paid for by the seller and offer to pay a few such as title policies, escrow fees, transfer fees. Ask your agent to befriend the seller's agent because sometimes sellers reject offers based on what the seller's agent has to say about your agent.

Find Out What's Important to the Seller.

Ask your agent to find out the hot buttons in the transaction. These could be seller requests or listing agent expectations — ask what will seal the deal and give it to them. Maybe it's a fast closing. Maybe it's a longer than usual escrow period.

Share the Love.

Most sellers have an emotional attachment to their home and want to see it fall into the hands of an acceptable buyer. Be that acceptable buyer. Write the seller a brief letter explaining why you love the home and why you deserve to be chosen as the winning offer. Be sappy but sincere.

Prepare for a Counter Offer.

You can write the best offer, and a competent listing agent is likely to advise the seller to counter all the multiple offers, even in a buyer's market. In California, for example, sellers do not need to make identical counter offers. Each can be different. Also, the seller retains the right to choose or reject accepted multiple counter offers.