When there are lots of buyers competing for fewer properties, it is still quite possible to find and purchase a home that meets your needs. It just requires some knowledge and negotiation! Here are some tips for making strong offers in a seller’s market or other multiple offer scenarios.
1. Make your first offer your best.
You might not get another chance to negotiate! Sellers are not obligated to respond to an offer; they do not have to reveal the existence of other offers and they do not need to maintain the confidentiality of your offer.
Your agent will always help you structure an offer they think has the best chance of being accepted whether you are in a multiple offer situation or not.
2. There’s more to an offer than just price.
Price is certainly a top priority of most sellers when reviewing offers, but you should also consider other factors that will set your offer apart from others.
Your agent may advise you to put down more earnest money or option money. They may recommend a faster or more flexible closing date, a shorter option time, and the removal of some contingencies or requests.
Note that waiving contingencies and inspections can be risky and should be weighed against your overall desire to purchase the property. Discuss the implications of your decisions with your agent and make sure you fully understand the risks.
3. Keep it simple.
Make your offer as simple as possible — this is not the time to make a lot of requests of a seller.
Your agent can explain how to make your offer as clean and simple as possible. The more elements in your offer, the more likely the seller will think it’s complicated and move on to something easier to negotiate.
4. Get a market analysis.
Your agent can provide you with one for the property you want to purchase.
Sometimes when the market is moving quickly, historical sales will not keep pace with market demands.
If you decide to make an offer above asking price you and your agent can decide what’s reasonable for the market and what’s comfortable for you.
5. Appraisal may not matter.
Appraisal value might not matter in a seller’s market or multiple offer situation.
Often buyers think they’ll have an “out” in the contract if the property does not appraise.
If you make an offer above asking price most likely you will need to remove any appraisal contingencies.
This is also where a strong preapproval letter from a reputable, possibly local, lender is so important. Work on this before you make an offer.
6. “Love letters” may NOT be a good idea.
Historically notes from the buyer to the seller have been seen as a way to get the seller to “know and like” the buyers and choose their offer.
This is now seen as a potential fair housing issue. It could even put you at a disadvantage in negotiations. Do not submit a letter, photo/video, Facebook message or any other communication to a seller without discussing it first with your agent.
...
Your agent is highly skilled in negotiations and you should rely on their knowledge about the market and about you and your unique situation to help you negotiate. However, the more all parties know going in, the better!
Thinking of buying soon? Check out our list of 10 Questions to Ask Before You Buy a Home. Still have questions? Talk to one of our experienced agents; they'll be happy to help you with whatever you want to know.
