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Posted by Holly McDowell on May 24, 2021
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How to Win in a Multiple Offer Scenario

Looking to purchase a home in Spokane? Expect that there will be competition to purchase a home. The Wall Street Journal partnered with Realtor.com to determine the top emerging house markets in America.  (Read the article here). The Spokane market ranked number five. This isn’t evidence of only where the Spokane market is heading – this is where it is.  It is critically important to be prepared, in advance, much like a game of chess.  Here are the top strategies to win in a multiple offer scenario, based on my experience in the Spokane market.

Choose an Experienced Team

Who is on your team?  The two most important people you can have in your corner are the Realtor and lender.  This is not the time to get a quick pre-qualification from that online bank that promised a low-interest loan. You must select a reputable lender who has a track record of closing loans on time and providing accurate pre-approval letters.  This is important to note – a pre-approval is not the same as a pre-qualification.  Most pre-approvals are as good as a mortgage commitment and are generally only subject to a successful appraisal. This provides confidence to the seller that you will be able to close. 

Take your time and select an experienced Realtor to represent you.  Interview multiple agents. Make sure the agent you are selecting is a full-time agent, and not using real estate as a side hustle. Ask questions like: 

  • What is your strategy to win in a multiple offer scenario?  
  • In what ways can we write the contract to make it more attractive to sellers? 
  • What is the average percentage over list price that similar homes are selling for?
  • Have you won homes for your clients in multiple offer situations before?
  • Do you monitor for sale by owner properties that might fit our criteria?

Have Fewer Contingencies

An offer with fewer contingencies, or opportunities for the buyer to back out and retain their earnest money, is much more appealing to sellers. There are two contingencies that I do NOT recommend waiving – appraisal and inspection. If the house doesn’t appraise and you didn’t include an appraisal/financing contingency, then you are still on the hook to close or lose your earnest money deposit.

In a competitive market, it starts to be commonplace to waive the inspection contingency.  There are other ways to make your offer competitive AND include the inspection contingency. First, shorten the time frame.  In Washington State, the default inspection period is 10 days. Your Realtor should have an inspector who can accommodate an inspection in 3 days providing the seller with more certainty.  Additionally, make it an as-is sale. This preserves your right to back out of the contract if major repairs are needed and assure the seller that you will not use the inspection to negotiate a lower price.

Make a Large Earnest Money Deposit

The earnest money or good faith deposit shows the seller how serious you are about purchasing the property and indicates you are willing to get the deal done. Sellers also feel uncertain in this market and a solid deposit strengthens your offer in a multiple offer scenario. The earnest money deposit is applied to your purchase price and closing costs – it isn’t lost to you unless you back out of the contract for a reason not covered by a contingency. The maximum amount you can deposit in Washington is 3%. The seller is not legally allowed to recover any more than that in the event of a breach of contract.  In Spokane, it is unusual to see a 3% deposit, and much more common to see a 1% earnest money deposit. Consult with your Realtor as to what is customary, and then add more.

Consult the Sellers

A great Realtor will reach out to the listing agent as soon as possible when writing an offer. Don’t assume that the highest price and the quickest close is all the seller is looking for! Maybe they are looking to buy a larger home and need a longer close or a rent-back to allow for a home search.  Perhaps flexibility is paramount, and communicating that to the listing agent will put your offer at the top of the pile. It is also possible that the listing agent will disclose a “dream price”, or the number that will make the seller accept your offer immediately.  

Buy the Payment

Interest rates continue to be very low. When looking at your maximum offer amount, consider how an increase of $10,000 will impact your monthly payment. Currently, that additional $10,000 will only cost you about $40 per month. Would you walk away from this house over $40 a month which is the equivalent of one coffee a week?  Price is one way to show the seller the level of desire to buy the house. Do not be tempted to offer the asking price and then bury an escalation clause in the contract.  Make a strong offer from the first page.

Other Tips

Here are a few other ideas that will help separate your offer from the pack. Remember, this time is stressful for the seller too and efforts to reduce their stress might pay off.

  • Offer to cover cleaning services after the seller moves out
  • Pay for a moving truck for one day
  • Provide handyman services to touch up paint, and fill nail holes (seller is obligated to do these things in the standard Washington purchase contract)
  • Extend an offer for the seller to stay in the home past closing

There are many other strategies to use when faced with a multiple offer scenario and a great Realtor will be so much more than a tour guide. Choose wisely, and interview!  Feel free to reach out if you have any questions or schedule a buyer consultation here.

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