Advice for getting the deal in the multiple bid situation

Asked by 7mountainstravel, Redmond, WA Sat Feb 16, 2013

We are looking at a home in Newport High district and have found there are so few homes on the market this year that the ones listed go into multiple offers very quickly. What is the best way to succeed with the best offer in this type of situation?

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Debra (Debbie) Rose’s answer
Debra (Debbi…, Agent, Livingston, NJ
Sat Feb 16, 2013
I agree with Ardell

I never advise my buyer to have their pre-approval written just for the amount they are offering.
Never
I know a lot of agents think that is "strategic".
I don't think it is.
ln fact, I think it can be counterproductive.

I mean, who are you kidding?
If you're negotiating, and you then increase your offer, you have to rush and get a new pre-approval letter written......ditto if you increase again.
It will become obvious to the sellers you are playing a game with the letter........for what purpose?

Just because someone can afford to offer more, doesn't mean they have to, or will ,offer more.

It's better if you look like the strongest buyer you can be (especially if you're competing against other buyers)......not a game player with constantly changing numbers.

From the other side - as a listing agent - I am very reassured when I see a pre-approval for more than the offer price......much more reassured............ and the sellers have confidence in knowing the buyer is more than qualified...and not stretching to the top of their limit.
1 vote
you're welcome!!
Flag Sun Feb 17, 2013
very helpful insights! thanks!!
Flag Sun Feb 17, 2013
Ardell Della…, Agent, Kirkland, WA
Sat Feb 16, 2013
I have to disagree with Ron. Do the preapproval at the highest amount you are pre-approved for. Nothing says "confidence" to a seller like a $600,000 offer with an $800,000 pre-approval letter. The pre-approval letter in multiple offers should NEVER be exactly the offer, as if you can't afford a dime more!

How would you feel if you lost it for $5,000 and the seller would have countered you because he liked your offer best...except you made it look like you were barely qualified? Even if you won't go any higher in price than your offer, it is never good in multiple offers to look like you can barely make it as to the financing.
1 vote
Bob Kelly, Agent, Bellevue, WA
Sat Feb 16, 2013
You might try approaching the landlords with current rental ads to see if they are willing to sell to you. Otherwise, try to put the first offer in. I live just off Newport Way and could preview listings for you. Shorten up the inspection period to 5 days and offer above list price. You can cancel during the inspection period for any or no reason without spending money. - Bob Kelly / eXp Realty
1 vote
Ardell Della…, Agent, Kirkland, WA
Sat Feb 16, 2013
There really is no sure fire way to win in multiple offers. The last one I did with 10 offers in Bellevue my client was all cash and no inspection contingency. Even at that we were 1 of 4 or 5 cash offers out of the 10 total offers. In the end my client got the house because the agent for the seller trusted me the most to follow through and close.

The seller's agent fears assisting the seller in choosing the wrong buyer who is going to cancel after the win, which happens all too often. The mere fact that you are asking this question here tells me you do not have an agent at all, or an agent you rely on 100% to handle your situation best. The seller's agent may pick that up as well.

Very often when there are 3 or more equally qualified offers of about the same amount, who your agent is will be the decision making factor. Choose wisely.

Many people make the erroneous assumption that if they have no agent at all, it increases their chances of getting the house because the agent for the seller makes double. Not so. In fact the opposite is true. When there are multiple offers the Seller's Agent almost always makes it clear to all of the agents that none of the offers are "his". It can be a big mess for the Agent for the Seller if the winning offer is one that the Agent for the Seller wrote for the buyer acting as a Dual Agent.

The exact answer depends on the situation. Usually the agent for the buyer can glean information that will help you in the days before the offers are reviewed. Every seller is different and has different fears and objectives. Knowing what terms and not just what price is key. Rarely does the agent for the seller spell out those terms in detail. You need to have an agent you trust SO much, that you wouldn't be asking this question here in this forum. You obviously do not.
1 vote
Since we like to confirm advice thorough multiple perspectives and this is a good forum I presented the question to be better prepared. We are know that one quality we will look for in a buyers agent is for them not be condescending regarding our questions. thanks for your input.
Flag Sat Feb 16, 2013
Great response!
Flag Sat Feb 16, 2013
Kary Krismer, Agent, Renton, WA
Sat Feb 16, 2013
I wouldn't recommend doing a pre-inspection. First, it is too costly to do before you even know the seller will accept your offer. Second, even in this market it is still possible to negotiate inspection items. Third, it would take too long.

I had a transaction last year where I previewed a property the day it came on the market, wrote up a contract knowing the client would like the house, had the client look at it that afternoon and then sign the offer I had already prepared, and finally had the client's offer to the listing agent that evening. Even doing all that we were not the only offer received. We were also not the highest offer, but fortunately the seller selected our offer (even though I could not vouch for the lender on that transaction).

If we'd done an inspection that could have allowed time for other bidders to come in, or the seller might have accepted the other offer.
1 vote
Jason & Sama…, Agent, Kirkland, WA
Sat Feb 16, 2013
We have had multiple wins with our strategies in this very fast market. The first thing to remember is you and/or your agent need to be the first to see a home when it comes on the market. When you wait to the weekend to have "time" to see a home you've already lost the battle. Second, get your contingencies out of the way up front. Do a pre-inspection, review and waive the form 17 (assuming your comfortable)and be fully pre-approved. 3rd, send your agent into battle to fight for you and your offer. Here there are number of things that can be done, but each unique to your broker/agents strategies. We are always available to help, feel free to reach out!
1 vote
Kary Krismer, Agent, Renton, WA
Sat Feb 16, 2013
I wrote a blog piece on that topic last year:

http://www.trulia.com/blog/kary_l_krismer/2012/07/buyers_how…

There are a ton of other little things I didn't go into, such as the choices you make when filling out the contract. Sometimes a little investigation before making an offer is better than making a choice the buyer might not like. As an example, investigating the capacity sewer charge so that you can select "assumed by buyer."

http://www.trulia.com/blog/kary_l_krismer/2012/04/10_000_hid…

But the biggest factors remain having an agent that can write good solid contract without technical defects, and having that agent be able to say that they are familiar with the lender the buyer is using. That will give the seller a lot of confidence that the transaction will actually close. That was important even prior to multiple offers being so common.
1 vote
Yu-Fen Lee, Agent, Bellevue, WA
Wed Jan 15, 2014
I've posted an article and discussed several tactics in detail on my website. You can see the discussion at: http://www.brokeremma.com/real-estate-negotiation-strategies…
Basically, you can (1) submit the offer at the right time, (2) put down a significant amount of earnest money deposit , (3) waive the sales contingencies, and (4) use the escalation clause in the purchase and sale agreement.
0 votes
Mack McCoy, Agent, Seattle, WA
Sun Feb 17, 2013
The problem with the question, 7ms, is that it presumes that there is just one type of seller.

If there was one best way to win multiple offer situations, we'd all be adopting that best practice, and then what?

The secret to winning in multiple offer situations is (deleted by the Secret Keepers).

I suggest recalibrating a bit - I think that buyers who spent last summer and fall imagining $400,000 homes are finding that in practice, those houses are now selling for $425,000. Recognizing that, they might recalibrate and focus on $375,000 listings where they can outbid competitors.

All the best,
0 votes
Ron Thomas, Agent, Fresno, CA
Sat Feb 16, 2013
Put yourself in the position of the Seller:
You want the highest bid, as long as it is a strong, committed Offer.

Have Realtor representing you.
Have your Realtor do a CMA to determine the Market Value.
Have your Lender give you a Pre-Approval for the exact amount that you are offering.
Do a complete "inspection" of the house and lot with your Realtor.
Do not spend money on a "professional" inspection; it is not your house yet.
Assume that the CMA will be very close to an APPRAISAL.
Do not spend money on an Appraisal; it is not your house yet.
Depending upon how much you want the house, offer a little over the Market Value: This will either get you the house, or, at least, get you on the list for a "best and final offer".
Understand that anything over the Appraised Value will have to come out of your pocket in the form of CASH.
Do an "AS-IS" offer at your own peril: Add the Inspection Contingency to protect yourself; if the house needs a lot of work, you are better off losing it and finding another house. Especially at full Market Value.
0 votes
Kary Krismer, Agent, Renton, WA
Sat Feb 16, 2013
I agree with Ardell that a buyer coming in without an agent is typically a negative.
0 votes
Bob Kelly, Agent, Bellevue, WA
Sat Feb 16, 2013
Let the contract speak for you. It won't matter how empathetic your realtor is.
0 votes
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