In red-hot real estate markets (see: Colorado Springs), multiple offers on one property is no longer a rarity. As buyers who have been out looking for homes on the weekends know, it is very common and extremely competitive. It is understandably frustrating to fall in love with a home in your price range, go to write the offer, and find out that multiple offers have knocked it out of your price range. It is especially frustrating when that happens multiple times a week! Eventually, much like a bad rom-com protagonist, you just become numb and jaded to love.
This is basically you.
But don’t worry. We’re here to take off your glasses and sweep you off your feet with these 7 strategies to compete against multiple offers and get you into a home that you love. These are strategies that we’ve used with our clients and they have worked wonders.
1. Offer more money (intelligently)
Okay, that’s an obvious one, but it still bears repeating. Most of the time, the home that offers the most money gets the home. However, if you offer more money while also being cognizant of the appraisal, you will have a great chance of getting the house. Many people assume that offering $50K more than everyone else will automatically get you the house, but if the home appraises for $30K less than you offered and you can’t cover the difference, the entire deal falls apart. So, more money helps, but awareness and smarts count for even more.
2. High-quality lender and a pre-approval letter
In competitive real estate markets, you need a pre-qualification/pre-approval letter attached to every offer you submit. You just do. In a multiple offers situation, you not only need that letter to even be considered for the property, but you also need to be working with a lender with a good reputation. Many clients choose to go with the companies they bank with for their mortgage lender, which is usually a big national chain. However, many of those chains have bad reputations with other real estate agents for being shoddy with their paperwork and delaying closings. Additionally, they have the reputation of over-estimating what their clients can actually qualify for, so it gets to the zero hour and, suddenly, the client only qualifies for $255,000 when the purchase price is $295,000.
We always recommend going with a local lender over a national chain. They can usually offer the same incentives, rates, and many times they’re just easier to work with. All things being equal, an offer with a reputable local lender will edge out an offer with a questionable national chain for most agents and sellers.
3. Have your lender call the listing agent
Yeah, sometimes lenders can be too committed to getting the deal done…
If you went with a local lender who you and your agent have a good working relationship with, then this is a great idea. Many times, it comes down to a choice between a couple of offers. If your lender can call the listing agent and let them know how strong of a candidate you are and how certain they are that you’ll get funded, that is a huge boost to your offer. This helps get our offer to the top of the pile more times than not, especially if the dollar amounts, closing dates, etc., are all relatively similar. Real estate agents and sellers do not want to deal with financing falling through and, thanks to receiving multiple offers, they don’t have to. A confident and capable lender advocating on your behalf is a fantastic asset.
4. Offer cash
Americans love cash and sellers are no different. If you have the ability to offer cash, do it. Of course, it’s hard to have that much money sitting around, but those with the cash are reaping the benefits. Lately, so many out of towners coming from expensive markets are flooding the market with tons of cash from their home sales in a lower cost of living state like Colorado (at least when compared with California…).
The benefits of cash are numerous, but the biggest advantage is the short amount of time it takes to close. Traditionally, a closing with a conventional loan takes around 30 days, as a rule of thumb. But, with cash, you can cut the length of time between accepting the offer and closing by more than half. From the buyer’s perspective, you can get away with offering less than the other multiple offers because of the lack of headaches and nervousness that the loan process instills on every side of a real estate transaction.
5. Waive inspection (buy as-is)
Admittedly, this is not a strategy that most real estate agents would recommend – and for good reason. In a normal residential real estate transaction, you get an inspection done, you ask the seller to correct some of the issues that come up, and both parties come to an agreement on what will be fixed. By waiving your participation in that process, you are opening yourself up to buying a house with big issues that you’re unable to hold anyone else accountable for. You wouldn’t be able to back out at that point without losing a good chunk of change. Now, you can still get your inspection done, but you cannot object to anything that comes up in the report.
That’s a risky game to play, but if you’re confident, you can do it. It removes another obstacle to closing and another cost for the sellers, so it certainly improves your offer. But, your mileage may vary. We never recommend it, but if there’s that one house you want, you can give it a shot.
6. Close in less than 30 days
If you’re offering with cash or if you’ve got yourself a fantastic lender, this strategy makes your offer very strong. Sellers want to close quickly. The less time and stress, the better for all parties involved. If you and your real estate team can get a home closed in 21 days, as opposed to 30, then do it and reap the benefits. Again, all things being equal, an offer with less than 30 days closing is going to the top of the list. It shows confidence and it indicates that you’ve got your ducks in a row and you’re ready to get this thing done without a hitch.
7. Write a “love letter”
Writing a “love letter” is a very popular new trend, especially in real estate markets with an abundance of multiple offers situations. A real estate love letter is, as the name indicates, a letter to the seller telling them how much you love the house, how your kids just fell in love with it the first time they saw it, and how Janet said the funniest thing about the crown moulding. These frequently includes cute pictures of a family and a dog, which goes over very well in a dog-crazy state like Colorado.
These letters have been proven to work, but another trend is cropping up in response to these letters. Many agents are refusing to even read them or to look at the pictures, because they don’t want to be accused of violating any fair housing laws. Let’s say one of the love letters for a four-bedroom house is a picture of a young family and the other is a single guy. If the young family gets the house, then the single man has a case that his fair housing rights were violated because the real estate agent saw both pictures and decided that the house was more suitable to a family than a single man. It may sound out there, but these complaints happen more often than you’d think, especially when the offers become personal.
Again, the strategy can work, but don’t be upset if the real estate agent advises the sellers to not look at any extraneous material.
So, there you have it! 7 fantastic strategies to help you win in a multiple offers situation and get you the house you’ve always wanted. Talk to your realtor about these options and, if you don’t have a realtor, come talk to us about it! If you have any suggestions for things that worked for you in the past, please let us know! We are always looking to get our clients an edge in this market.