NAVIGATING MULTIPLE OFFERS AS A BUYER

Dated: November 23 2020

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A new home is recently on the market, and is priced below market value, in a prime location, or just flat out awesome. It is sure to drive buyer attention and create competition. Navigating through a multiple offer situation as a buyer can be one of most exhilarating and stressful parts of home shopping. Needless to say, only one group will prevail and win the bid. Here are some tips to help you navigate correctly. 

Do your research 

If you find the property of your dreams, first you need to determine the how much you are willing to pay for it. Work with your real estate broker and review recent sold comps in the area. Often in any given neighborhood, especially in the city you will have similar homes that have sold on the same street within the past 6 months. You can then make adjustments based on material facts like lot size, square footage, features, and updates. The key to this is to use the comps to determine a price you think the house will sell for, and then determine how much you are willing to offer to ensure you will win the bid. 

Determine the max price you are willing to pay

A multiple offer situation can turn unpredictable. People may do some crazy things in order to win the bid, such as offering well over list price and waiving contingencies. This may cause problems down the line especially if you are financing the purchase with a mortgage, and may force you to come out of pocket to make up the difference on appraised value. The rule of thumb is to work with your agent and determine how much you are willing to pay. If you lose out you know you took your best shot. 

Come up with creative ways to make your offer stand out

An escalation clause is one way to jump ahead of the buying competition. You can work with your broker and determine the range you think the home will sell for. For example, a very hot listing comes to market for $350,000, multiple buyers are interested, and you are asked for your best and final offer. You can offer list price, but also include an escalation claus where you would be willing to beat any other offers by x amount up to $365,000. It doesn’t always work but its a good way to win a bid, and to ensure you don’t miss out on a deal by a couple thousand dollars. 

If you are on the winning end of the multiple offer situation, congratulations. If you are not, it’s okay to feel bummed. I’ve been on the losing end of a multiple offer situation as both a buyer and an agent plenty of times. The one thing I am 100% sure of is that although it doesn’t feel like it now, this will work out in your favor. Something better will come along that you will love more. It always does. 

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Jay Caracci

Jay Caracci, a HomeSmart Connect Real Estate Broker strives to make Real Estate easier for you. A multi-million dollar producer, podcaster, and marketing expert, Jay specializes in all things real est....

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