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How to Win in a Multiple Offer Situation

February 9th, 2018 | Real Estate, Michigan Real Estate, Buy A Home Michigan, Multiple Offers

 

Competing offers

How to Navigate Multiple Offer Situations

You have toured your dream home. Before you have a chance to make an offer, you are notified that the Seller is expecting multiple offers. What’s next? How can you increase your chances of getting your offer accepted?

This situation is one, that if properly navigated can turn out fruitful for the buyer. It is a perfect example of how the human aspect of the transaction comes into play; and moreover, why it is important to have the right team behind you and your offer. 

Any great agent will tell you the first step in making an offer is to connect with the listing broker via a phone call. It’s important that it is a phone call because it allows to better understand tonality and intention in the voice. A great negotiator will take this phone call and achieve a few things with it:

  • Build Rapport
  • Understand the personality and selling style of listing agent
  • Determine what is important to the Seller (outside of price) and what their expectations are.
  • Find out what other offers are in, expected, and what they look like.
  • Find out how the Seller will be responding to offers. Is there an offer deadline? What is a realistic response time of the Seller?

Your agent’s goal on the initial phone call is to understand the listing agent’s personality and sales approach. What you are gauging here is their proclivity to divulge details as well as understanding the Seller’s expectations. If the listing agent tells you that the Seller perhaps would like, a quick close, or a rent back, or a short inspection period; whatever it is that they are looking for make sure you reflect that in your offer. You want to appear engaged, easy going, and flexible as a buyer at this point. It can make your offer stick out in the end.

Remember: the end game is to get as many details about the other offers as you can. You want to know what you are up against! Some agents are more systemic with almost robotic responses you will hear all of the time and some agents are quite outgoing and tend to “spill the beans.” The more details, the better you can frame your offer to be in a higher position.

What do you want to know about the other offers?

  1. Price: The most important facet you are trying to determine is price. You can beat every other facet of a competing contract and still lose because of price. Price (usually) trumps all. At the very least the listing agent should let it be known how many offers there are, and how many are above asking price. 
  2. Terms included in other offers:  Are the other offers contingent on selling? How are they being financed or are they cash? There are also tools that buyers can use in certain situations that can benefit them greatly. Some common ones you want to find out if you are up against are:
    1. Appraisal Waiving: Buyers agree and are willing to bring X amount of dollars to the table if the home appraises less than Purchase Price.
    2. Taking the property, “As-Is”: Buyer’s will retain the right to inspect the property but are preemptively agreeing not to ask for any repairs to be done by Seller.
    3. Escalation Clauses: Buyer’s will agree to beat any bona-fide offer by X amount of dollars sometimes up to X amount of Purchase Price.

Note: If you do happen to be up against one of these very strong aspects of a competing offer, discuss with your agent how you can best combat these. Some listing agents and sellers don’t appreciate escalation clauses or waiving appraisals. Find out what they think of them and use that knowledge to decide if you will follow suit to compete.

     3. Find out how the Seller will be responding to offers and when:

Sometimes in a multiple offer situation, the “early bird” doesn’t get the worm. If the seller plans to accept offers until a certain day and time it rarely will benefit you to get your offer in hastily. In fact, if you do find this to be your situation when speaking to the listing agent, let them know that your buyers will be submitting an offer, but that you are going to give them a call sporadically and see how many offers are on the table. This way, you can better understand all of the offers and not just the ones that are in so far. If you submit a very strong offer as one of the first, any great listing agent is simply going to leverage your great offer against the others expected to come in.

Once you have accumulated all of the information you can, you are ready to shape your offer to compete with the others. By building rapport and shaping a thoughtful and strong offer to the Sellers, you are putting yourself in the best possible position to compete in this market. It can be the difference between getting your offer accepted or not. Losing out on your potential dream home is never an easy pill to swallow, especially if it could have been avoided by using these tips.

 

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