Even in these crazy times with the country starting to open up, multiple offers are still coming in on a large number of properties. Many buyers are becoming more and more frustrated as they repeatedly fail to get the house they want. One buyer told me that they have made offers on 7 different homes only to be outbid on all of them AND they offered over the asking price on 5 of them. They have asked themselves what they could have done differently to get the home they wanted. While there is not a perfect solution for how to win a bidding war, there are some things you can do to make your offer look better to a seller. Here are a few suggestions:
1. Be Realistic
If you want the house and there are many other offers in all likelihood many are going to be over the asking price. The number of offers will tell you how much interest there is. Others who put offers in over the asking price are valuing the home at more than what it is listed at. Are you? If you don’t think it is even worth the amount the seller is asking why are you making an offer? Your REALTOR® can help you by showing you comparable sales. Make an offer that is comfortable for you. If you think the home is worth 10k more than the asking price than offer that. If you find out that the house sold for $1000 more than the asking price and you offered only what the seller was asking you are going to be upset, correct? One thing a former REALTOR® told me, the buyer isn’t overpaying, they are simply catching the house as its value goes up.
2. Letter to the seller
Every once in a while a seller will say and act on the idea that “Money isn’t everything, it is more important to us who gets our house” (Yes, this actually does occur). Therefore a letter from the buyer to the seller can be a big help in helping your offer stand out. These personalized letters, can help depending on who receives them and how they are written. The point of the letter to the seller is to show the buyers as human beings, not just names, dates and numbers on a contract. The best letters point out commonalities. For example the buyers may love to go camping. By pointing out their mutual love of camping they can connect with a seller in a meaningful way. People like doing business with other people that are just like them so it’s important to build that rapport with the seller. Another important thing to do is to talk about just how amazing their home is. Never ever try to negotiate in a letter to the seller. The main point in the letter is to make the you come alive and tell the seller how beautiful their home is and what a great a fit it is for you.
3. Appraisal Difference
It’s rare but as strange as this might sound, just because you offer $50,000 over the asking price, doesn’t mean that your offer will get accepted. Some sellers will be concerned that the bank or mortgage company won’t find comparable sales to justify a price $50,000 over asking. To make sure that your offer does get accepted and put a clause in the contract that states, "If property does not appraise at or above the agreed upon price, the buyer is willing to cover the difference up to $20,000 (for example)". This gives some peace of mind to the seller that they will be still be able to close. Check with your REALTOR® and more importantly your mortgage lender to see if this type of clause is feasible or wise in your situation.
Two standard contingencies in any offer are typically; home inspection and financing. Are you willing to waive a home inspection? Not something that is recommended, however you may tell the seller that you aren’t looking to renegotiate the deal all over again if any minor home inspection issues come up. With the financing contingency, if you have a relationship with your mortgage agent and he/she has all your documentation and told you that all you need is a positive appraisal, put that in the offer. By making the offer only subject to a positive appraisal (you can even sweeten it by writing in what we wrote above) you make your offer much, much stronger. However, you must be 100% sure that you can do this or you could potentially lose your earnest money deposits.
Before implementing any of these suggestions, talk with your REALTOR®, mortgage agent and real estate attorney. Make sure that if you are doing anything that changes the standard terms and conditions in a contract you run it by all three professionals. They can let you know what may or may not be appropriate for any given home purchase.