How to increase your odds in a multiple offer situation
So you want to buy a house?
Whether you are a first time home buyer or a seasoned investor, navigating through a strong seller’s market like the current one can definitely be a challenge.
More often than not, you will be put into a situation where you’ll have to wait until a specific offer date to submit your offer, only to find out that you’re up against 3,5,10 even 20 other people for the same home.
Losing out on your dream home can be extremely heartbreaking and discouraging, especially if it happens more than once.
So what can you do? There are a few key considerations I suggest in order to be fully prepared to put your best foot forward on offer day, and it doesn’t always come down to money.
There’s no surprise that having fewer(ideally no) conditions is going to put you on top. So here are a few tips on how to do that.
Get Pre-Approved. Talk with a trusted Mortgage Expert. Be confident about what you are able and willing to spend on a home. Have all the actual documentation required in to the mortgage broker so that there is no question that you are in fact pre-approved. Getting all the paperwork in order can be a bit of a process, so this should be your absolute first step before your house hunt even begins. It’s also important to allow your mortgage expert to communicate with your realtor. Make sure everyone is on the same page when it comes to knowing the numbers. If you find a house you love, allow your realtor and mortgage expert to speak directly.
Start your house hunt with a local, experienced realtor who knows the city and neighbourhoods. Find out the comparable listings and recent sales. Ask about market statistics.
So you found “The One” and you’re ready to submit an offer. Maybe it’s an older home and you don’t feel comfortable omitting a Home Inspection condition and that’s totally understandable. I hate to say it but these days, an inspection condition will often make you lose out on the house. There are ways around this and all it takes is a bit of planning. Some inspectors offer what is called a 2 part inspection. This is designed for going into a multiple offer situation. The first part of the inspection will be done even BEFORE the offer date. It’s about 1.5 hours and your inspector will explore the roof, attic,HVAC, electrical panel and structure. It will give you peace of mind (or prepare you) if there are any major issues to be aware of. The second part of the inspection will be finished IF you are successful in the purchase. This method allows you to split up the payment so you aren’t fronting $500 when you may not even get the house.
Find out the seller's situation. Ensure that your realtor communicates with the listing agent to find out what type of position the sellers are in. Find out their ideal closing date and try your best to accommodate that.
Increase your deposit amount. Usually a seller will request anywhere from $10,000 to $25,000 for a deposit. Think about bumping that number up and offering more than they want. This shows how serious you are and it shows good faith. A deposit will be due within 24 hours of an accepted offer. Even better, you can submit your deposit WITH your offer.
Write a letter. Cheezy? Maybe. Effective? Absolutely. Write up a short letter to include with your offer telling the sellers about yourself and why you love their home. Remember this is an emotional process for people. A seller will usually want to know that you are going to love and take care of the home as much as they did.
Put your BEST offer forward the first time. Depending on the region, agents may handle multiple offer situations quite differently. Currently in Guelph, we have seen just how important it is to bring your strongest offer in at the start, since there is often no chance to improve your price. Submit an offer that you will have no regrets if you are not successful.
Ensure that your realtor is in constant contact with the listing agent on offer day. You want to be kept up to date on how many offers are being registered so you know what you’re up against. Your agent should be communicating often with the listing agent. This will let them know how interested and serious you are.
While there are other factors that come into play in each situation, by keeping these considerations in mind, you will be well-positioned to make an attractive offer that will be highly competitive but also one that you are comfortable with.