How to Win Multiple Offers in 2023
Tags: real estate market, multiple offer, real estate multiple offer, how to win multiple offers, bidding wars, house bidding wars,
How to win in multiple offers?
Dealing with multiple offers in real estate can be a challenging and competitive situation for a buyer.
No matter the market and what offer situation it is, you need to be prepared. Imagine an athlete in order to be the best in the upcoming competition, they prepare month and even years for that one day to win. As a real estate buyer, regardless of the market, it is also very important that you’re prepared for purchase of your next home, especially when it is a busier market and chance of being involved in multiple offers and competition is very high.
To understand how to deal with multiple offers, you need to understand the offer and what’s involved.
Other than legality terms and required components needed to create an offer the followings are the highlights of your offer:
The first thing to do when you want to be prepared in your real estate journey is to:
Work with an experienced real estate agent: An experienced real estate agent can guide you through the process and provide valuable insights about the market and your competitors.
Working with an experience agent can remove the stress from all the steps involved and this guidance is necessary for all and any type of buyers, whether first time buyers or savvy investors. We mentioned the offer highlights. Price:
An experience real estate agent can advise you about the market value price.
There are many techniques in how sellers approve the pricing of their property.
One of these techniques that can bring increased pool of buyers and attract buyers is pricing below and expect bidding competition. This technique, although, personally I’m not the big fan, it is practiced widely and the reason behind this is it has been working to the benefit of the sellers, so why not.
This technique prices a property at a level that attracts even those buyers approved for lower price participating in the offer competition, and since the price and or terms on all offers are confidential, by receiving any low bid offer, the sellers use these as their leverage for those buyers with more affordability to bid higher and higher.
Question is how do you know how high you need to bid and what is the definition of List price?
List price: The seller list a price and are asking for offers! Let me highlight this again: The sellers are not asking for the price. So the terminology that you’ve heard many times as “Asking price” is not a correct term, since the sellers are listed a price and asking for OFFERS. That means what the seller expect is certainly not a listed price. (in slower market, or in other words, buyer’s market, the seller knows the listed price maybe negotiated lower than what they listed and in busier market, same goes, as to the listing price maybe negotiated higher than listed. )
Now that you have a full understanding of the list price, in a busy market where competition is high and the technique of lowered listed price is practice to attract more pool of buyers, how do you know how high you need to go.
There are 3 factors that can help you with it:
A) Since you’re already have chosen a knowledgeable real estate agent to assist you wit your purchase, it is our job to advise you on the “Comparable Market Analysis” or CMA and make sure you’re aware of the market value of that property. Nonetheless, is Market value going to help you win the bid? If you stick wit the market value, is this guaranteed you’re going to be the multiple offer winner?
The answer is NO.
It is important to understand, as soon as there is a secondary offer is involved, it makes it a competition (so multiple offer could be 2 offers or 50 other offers, It is a competition) and what you need to understand when there is a competition, there is no logic. Meaning, market value, CMA, and normal one on one negotiation is all out of the window and it is only your motivation against the other buyer’s and it is your decision and that’s going to bring us to the other 2 Factors:
Which are the 2 questions you need to ask yourself when knowing what the market value is.
2) First question:
How much you love this home and how much you see yourself owning this property from 1-10. Your answer will reflect on your monetary decision on high you’ll go in price and fight for this property.
3) Second question:
Assuming you paid thousands or hundreds of thousands more than the listed price and now your offer is accepted.
How much you hate yourself by paying more than anyone else and winning the bid from 1-10. Again your answer determines how high you’re willing to fight for that property.
As you clearly can see, as soon as it is a competition, it only falls within your motivation and how much you like to have that property.
If you depend on obtaining a mortgage, the all the your decision on how high on price depends on your approval limits.
Get pre-approved for a mortgage: Having a pre-approval letter from your lender can help you show the seller that you are a serious buyer and have the financial capability to purchase the property. Good news is that the mortgage professionals I have referred my clients to, analyze and prepare what the lenders need to the t and therefore in most cases, they can secure the 100% confirmation of approval. This will help with the scariest condition on the offer (Subject to financing) or contingent to financing approval.
This is a fundamental step to know high much you can compete and what’s your limit on the price.
If you remember, Offer is not only the price and has many other components that are important factors for the sellers to consider such as; deposit amount, date of closing, conditions (or contingencies) and the contract terms.
If you remember at the beginning of this video I mentioned “preparation”. And here are the 10 smart list to be prepared for making a very competitive offer to win in multiple offers.
1-Act quickly: In a competitive market, time is of the essence. Make sure you are ready to act quickly when you find a property you like. You need time to do all your due diligence and financing overview.
2-Doing due diligence in advance: You cannot blindly buy a property and research and due diligence is crucial.
A)Reviewing all relevant important documents in advance of writing the offer such as (title, leans, surveys and if strata, all the minutes, AGMs and forms)
B)Property Insurance and Taxes
C)Home inspection (yes, you can use the timing provided prior to the offer review time, to hire home inspector prior to writing an offer.
D)Reviewing all other factors important to you in advance prior to writing the offer such as (neighborhood, nearby constructions, amenities, crime rates, zoning and future potential of that property)
By waiving these conditions (or contingencies and performing them in advance to writing your offer, it makes your offer way more attractive as a clean and unconditional offer without going blindly and not doing your research. Isn’t it?
3-Deposit: Although deposit is part of your down-payment, it makes a great impression if it is larger than other usual 5%. It makes your offer standout out to be more serious. Better yet, I always advise my buyers to even have the deposit draft ready at the time of the offer, and submit a copy of that deposit to the seller. Having the deposit draft shows you’re not just another offer, you’re the offer that really wants this property and were serious enough to even go to your bank and obtaining that draft.
4-Be flexible: Closing date is another offer component where the sellers are looking at when considering offers. Show flexibility. Prior to write the offer, ask the listing agent what is the sellers preferred closing date. And if the answer is unknown, you can write to the sellers that the Buyer is flexible to change and amend the proposed closing to their preferred date.
5-Make it as simple and clean as possible: This also reflects number 1 and that was acting quickly. You can determine all and or most information by obtaining a documentation and proof from sellers. and by doing so in advance, you can simplify your offer of those terms. For instance: Empty home tax, GST, measurement, parking and locker number if strata, permits paperwork for renovations and such can all be obtained in advance for your review. This makes your offer looking clean and attractive.
6-Present your offer in person: This is a great advantage and old style way of showing how serious you are. Of course it will be not you who represent your offer. It would be your real estate agent presenting it to the seller and listing agent. This is a great opportunity to showcase your offer and highlight its competitive advantage.
7-Write a personal letter: A personal letter can help you connect with the seller on a more emotional level and show them why you would be a good fit for the property. Or even better, with our technology, if your only chance is to submit offers via email and digitally, include a video of you and your family, describing why you like this property. Some sellers they prefer the legacy of their home to remain and not to be bulldozed by developer investors.
8-Keep your emotions in check: It's easy to get caught up in the excitement of a bidding war, but it's important to keep your emotions in check and stick to your budget and priorities.
9-Stay on course: It is super important that during the course of your purchase, to be fully informed on market activities, trends and changes. It is important that your real estate agent communicate all this information constantly so you can make an informed decision.
10-Be patient: If you don't win the bid, don't get discouraged. Keep looking and be patient. The right property will come along eventually. Use this as an experience and review what went wrong to rectify for your other competition.