Home Selling in Bay Area>Question Details

Warriors, Other/Just Looking in Bay Area, Corpus Chr...

how do you decide how to bid on house when you know owner is getting multiple offers?

Asked by Warriors, Bay Area, Corpus Christi, TX Thu May 17, 2007

what are the factors that you should consider?

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A good strategy will be to look in to who is making the decision about accepting your offer? The obvious answer is the seller and in order to increase your chance to get your offer accepted it is important to speak with the listing agent and check what is the most important for the seller. Is it higher offer, Maybe cash only offer have some advantage, Is the seller wants to rent back after close of escrow. Are they looking for a family that will take care of the home?
Once you find out what are the seller need and the number of offers you should build an offer that match the seller requirement increasing your chance to get the offer accepted.
But make sure you do not make an offer you live to regret. Like an offer that is a lot higher then the market value.
Let me know what you think,
Paz
Web Reference: http://www.pazbreal.com
0 votes Thank Flag Link Sat Feb 18, 2012
To follow up on Mario's strategy, if you choose to submit offers on multiple properties at the same time, you must absolutely make sure that you have included language to protect yourself. In each offer, indicate that you have submitted offers on multiple properties and that the buyer must sign any offer accepted by the seller a final time before there is a legally binding contract. Otherwise, you could find yourself under contract on 3 properties!
Web Reference: http://www.RayandPaul.com
0 votes Thank Flag Link Sat Jul 14, 2007
I know this may be advice too late in the process..
When I work with buyers, I suggest early in the game that they not fall in love with one home. Especially, if the market is hot and sellers are getting what they ask for. To turn the tables and the odds on the seller's market (and to better your results in the buyer's market) find your top three houses and write offers on all three at once. By this strategy, you can be more comfortable writing offers that are more aggressive under the asking price. What the likely outcome is, is you will have three counter offers to choose from. These shed light on what the sellers are really willing to do. Now your choice of the counter offer comes with insight and time. Nice way to counter act a hot market.
0 votes Thank Flag Link Sat Jul 14, 2007
Mario Pinedo,…, Real Estate Pro in Beverly Hills, CA
MVP'08
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If you and your agent have done your homework, and you have a good idea of the true market value (be it above or below list price), establish your ceiling. I don't like the idea of guessing, and I don't like the idea of the seller selecting an offer that we never get a shot at matching or exceeding, so I like to include an escalator clause in multiple offer situations. With the initial offer, the escalator clause contains verbiage which agrees to exceed any other offer the seller receives by "x" dollars up to whatever price point you establish as your ceiling. Be sure to include language directing the seller to provide proof of the next highest offer upon acceptance. I have found this to be an effective means of calling the seller's bluff. You haven't bid against yourself if it turns out that you are the only viable buyer, and have cemented your position up to your pain threshhold. You also protect yourself from getting caught up in the heat of bidding. Now go get that house!
Web Reference: http://www.RayandPaul.com
0 votes Thank Flag Link Sat Jul 14, 2007
The value of an offer is more than just the offer price. Sometimes in a mulitple offer situation, the buyer who secures the contract is not the one with the highest number. A strong agent will uncover seller motivation and needs and relay this info to the buyer to assist in constructing an offer. The seller wants assurance that this contract will go to closing. Build the seller's confidence in that. I do recommend buyer letters attached to the offer. Discuss with your agent the amount of deposit, financing terms, and closing dates. These components are important criteria in the offer.

How much to offer in a mulitple offer? High enough that you won't be disappointed if your offer isn't accepted.

Kaye makes important points in considering the fact that if the property does not appraise, you, the buyer could be paying over appraisal and need to come up with additional cash funds to meet the LTV requirements for the lender. Also, don't get caught up with winning just for the sake of winning. A good agent can help keep you in balance.

Good luck.
Web Reference: http://PeninsulaFirst.com
0 votes Thank Flag Link Sat Jul 14, 2007
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
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Your agent should get as much information as possible including if any of the offers are coming from other clients of the listing broker or listing agent, if they will make counter offers to everyone, what type of offer the sellers are expecting, what is the most important consideration for them selling (it might not be the highest price) can they close escrow fast; if you know that there are 6 or more offers and the house is priced close to or at a reasonable comparable recent sale then you need to decide why you are making an offer. If you want that house and no other start at 110% of list price and make sure that the sellers dont punish you for guessing wrong and give you a chance with a counter offer if that does not work for them. If you have a ceiling on what you can pay, either look in a less competitive area and get more value for your money, or just give it your best shot with your best offer and make sure your agent can do a prefessional in-person presentation on your behalf. Perpare yourself for disappointment but be postiive and go for it!
0 votes Thank Flag Link Sat Jul 14, 2007
This can be a very tough issue for prospective buyers. On one hand the media talk about how prices are falling and the market is depressed yet when a buyer wants to buy in a local market he finds that contrary to what he has been reading the market is not losing value. There is no "formula" when it comes to being part of a multiple offer situation.
Knowing the market as noted by Keith is a must as is having a good local agent who knows market value. Here's something to remember not all multiple offers are over the listed price. Sometimes if a home has been on the market for a long time you may see multiple low offers if the property is generally seen to be over market value. There are agents who deliberately price a property low to stimulate multiple offers. However there are many homes that are priced at market but have such a strong presence that they will generate offers over the listed price.
In any multiple offer situation you should know what is the most you are willing to pay for that property. Be realistic and discuss where the agent thinks the price may go.. an experienced agent will usually have an idea how people will bid. You must be OK with the idea that if your high bid is accepted the property may not appraise for that figure.. so you should have enough cash to make up the difference.
Here's another idea. Often people get too caught up in the idea of "winning" and make offers they later regret.. which is why properties that had many offers often wind up coming back on the market. It might be a good idea to present a backup offer on a property so that if it does fall out you have an offer that the seller has accepted.
0 votes Thank Flag Link Fri May 18, 2007
Kaye Thomas, Real Estate Pro in 90266
MVP'08
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Know your market. I don't know the bay area, assuming you are working with an experienced agent I would expect that you and your agent would have a strategy planning meeting. Having survived the LA hot housing market (being one of 37 offers...not accepted BTW) in one transaction, my advice is to know what is available on the market, and know the value of what is being sold.
Our office had a listing a few months ago that sold with multiple offers because it priced low intentionally. There are reasons that listing agents have for pricing properties. Assuming they are working for the seller's best interest, there are times when underpricing is preferred.
Regardless of multiple offers, if you know the market, you know the value of a given property.
A good agent will do a little detective work and can find out why the home is being sold, when they need to sell, etc. (if I am the listing agent...not from me...unless it is to my seller's benefit).
However, once you know those answers, then you can decide if you want to play the game. Depending upon your goals, if you just "have to have this house" in a certian neighborhood, and (recall the a home purchase is emotional), I ask my buyers :
1. How much are you willing/able to pay
2. What is the alternative if you don't get the house?
Sometimes (schools, it's a house right next to my best friend), you just go in a play your best hand. If I can arrange for the sellers to meet my buyers, then I have a better opportunity. I have the buyers write a nice, handwritten letter, with a family picture, not only a pre-approval, but approval letter that reads: if the house appraises, my buyers get the loan", no other contingencies.
Lastly, I insist on presenting the offer personally to I can answer questions the sellers may have and have the buyers vote of confidence to "make it work".
I want to also know the listing agent. That's why agents that are "in the market" like having transactions with me, because they know the quality of my work. Even if a "better offer" comes in, if it comes down to "who can close escrow" and "who can I trust", agent to agent relationships are key.
0 votes Thank Flag Link Thu May 17, 2007
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
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Consider your qualifications (down payment, pre-qulaified, time to close, etc.), % above or below the comps for the home, and talk to your agent. Your agent will be able to give you the best idea of what number to place on your offer. Put yourself in the seller's shoes, why should they sell to you over another buyer. Give them a reason that your the safest bet to close the deal with the highest sale price.
Web Reference: http://www.flippingpad.com
0 votes Thank Flag Link Thu May 17, 2007
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