Winning Multiple Offers on a House (For Buyers): How to Write a Great Offer and Win a Multiple Offer Scenario
The market is hot, and there’s multiple offer scenarios left right and centre. If you’re wondering how to write the best offer possible that will result in winning your next multiple offer scenario, then this blog is for you.
Deposit – Size Matters:
When it comes to a multiple offer scenario, the size of your deposit matters. While the expected deposit amount is typically 5% of the purchase price, I’ve seen less than that and I’ve seen more than that. What the deposit signals is affordability, and whether or not the buyer has solid funds to be able to complete the purchase.
Whatever the amount is, the deposit is typically due within 24 hours of subject removal. If it’s a subject free offer, it’s best to have the deposit in hand and ready to hand in when you present your offer. Make sure that the deposit is ready in liquid funds – whether it’s your credit line, chequings, or savings account. Having it in your RRSP or TFSA can take time to get out, and time is of the essence when it comes to handing in a deposit.
For more information on deposits with or without subjects, read this blog post: Deposits in Real Estate 101
As mentioned in the previous point, have your deposit ready to go. However, there’s more to being prepared than just getting the deposit ready. Make sure that you’ve passed all your income documents along to your mortgage broker and that you’re fully pre-approved with the lender. Also bring the pre-approval letter with you to the offer presentation so that you can show the seller that you’re fully prepared and reliable.
It’s also a great idea to conduct a home inspection before you put in the offer. Try to see the home more than once before you write, and do a thorough home inspection (preferably with an inspector). Read the property disclosure statement, title search, and strata documents (if applicable) in advance as well so that you can make as clean an offer as possible. In bidding wars, all of this is absolutely essential, as the seller will see that you’re motivated and actively removing subjects in advance. Outside of a bidding war, if you do the following as well with little subjects, you’re more likely to have negotiation leverage over the seller and he/she may accept your offer at a lower price.
Don’t make mistakes on the contract:
It’s important that your realtor knows what they’re doing. There’s a lot to keep track of on the contract – terms, subjects, dates, deposits, prices, legal descriptions, PID’s, and addresses. If you’re working with an inexperienced agent, have the offer reviewed by a lawyer – this is a legal document you’re on the hook for, and it absolutely needs to be error-free and rock solid. If the listing agent notices that something is wrong and that the contract is sloppy, then they might worry about the legitimacy of your offer. The seller is more likely to feel comfortable with accepting your offer if it has no mistakes.
Determine actual market value:
If you’re planning on writing a low ball offer, or writing an offer at a price you decide is market value, then it’s probably not going to work out so well for you if you’re in a bidding war. The market is unfortunately smarter than all of us, and market value is determined by what other buyer’s are willing to pay for a property in the past and the present. Low ball offers encourage the sellers to think or do the following:
- Because we’re in a sellers market, sellers know that they can get fair market value or potentially above for their homes. If you’re not going to pay it, someone else likely will.
- Lowball offers that are completely out of line are usually a sign of an uneducated buyer (or buyer’s agent) or someone that chooses to ignore the market. This definitely won’t endear to the Seller, and they’re more likely to consider you a headache than to actually consider your offer.
- Lowball offers encourage the sellers to continue looking for another offer, therefore putting the lowballer in a multiple offer sitatuation – which ultimately defeats the purpose of the lowball. Bad strategies can cost you tens of thousands of dollars, so choose a smart starting strategy – not an opportunistic one.
Therefore, before you write an offer make sure to study the comparables well. Was this home renovated to the same extent as the one that just sold down the street? Is it under warranty? Was it owner-occupied or tenanted? In this kind of market, if the last one sold for $550,000 then it’s likely that this one will sell for more. Determine what fair market value is and discuss a strategy from there.
Be in it to win it:
If you’re in a bidding war, especially one with 3+ offers, be in it to win it. Put your best foot forward (or close to it), have your deposit ready to go, and make as clean an offer as possible.
Who you work with definitely matters, and who they know matters just as much. Having a realtor with good connections can supercharge your offer more than anything. If they have a good history of being great to work with, and are known as a true professional, then it’s quite likely that the listing agent will push your offer forward because they want to work with your agent. Negotiations can be tough, but it’s more so about working together than it is about working against each other. Top negotiators will know how to get you exactly what you need, while also making the seller feel like they got something in return: a win-win scenario. We’ve had a number of offers that have been won more so by the strength of our relationship with the realtor than the actual offer itself.
If you’re feeling frustrated with multiple offer scenarios, or are looking in to a high demand property to purchase, then Bridgewell is the right real estate team to help you succeed. We specialize in multiple offer scenarios, and know the tips and tricks to save you as much money as possible even when you’re competing with other buyers. Give us a call at 604-765-0376 to set up a time to discuss exactly what you’re looking for and how to get it. Prefer text? 604-319-0200. or email firstname.lastname@example.org.
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