Last week we talked about Buyers polishing their resumes as worthy buyers and really prepping themselves for effective offer presentations in multiple offer situations – something plenty of prospective buyers are familiar with these days.
I’m thinking about the 19 offers I received on a Westside listing last month. In the end there could only be one purchaser left standing. What happened to the other 18 prospective buyers who didn’t get the brass ring?
Since there haven’t been 18 great places in the same price range that have come on the market in the last month, I can only assume that the majority of those 18 Buyers are still wandering around the marketplace. Looking for the real thing.
Perhaps a few have found THE place of their dreams, beat the odds and come out on top in the multiple offer mosh pit this time. Maybe some have given up. Taken their bats and balls and gone somewhere else. But I suspect the majority will still be duking it out with each other on the next great place that comes on. And the next one after that.
Not unusual for Buyers checking out properties these days to see the same familiar faces of other eager Buyers over and over again at every open house. There’s a kind of “we have met the buyers and they are us” quality to the experience.
That’s right Buyers. Look in the mirror. Lots of those other Buyers out there are just like you. They want the same kind of house in the same price range. And they aren’t going away anytime soon.
It’s important that Buyers understand the hard truth of a marketplace where demand exceeds supply. In multiple offer situations Buyers aren’t really negotiating with Sellers. They are competing against each other.
Sellers have no idea what Buyers are or aren’t going to offer in terms of price or contingency timelines or financing scenarios. All they know is what they’d love to see in their wildest fantasies.
Think of a multiple offer process as something akin to a blind poker game. The Seller is the only one that sees everyone elses’ hand. But the Seller can’t tell anyone else what to bet. What cards to play. When to hold. Or fold. Whether to up the ante. Or raise the stakes. Buyers gotta guess those things for themselves. If they want it bad enough and have enough resources available.
If you are a Buyer – first you gotta find the right place. Then you gotta sit down at the table, play your cards and compete for it. The big question is – how can you increase your odds of winning when you don’t know what other Buyers are willing to do?
Remember – it’s not always about the highest price. Let’s say there are 10 offers on a house and all of them have been bid up to the exact same price. Here are a few rules of thumb about what trumps what in a game of multiple offers:
Larger earnest money deposit trumps smaller one
Agreeing with Sellers choice of title company trumps insistence on yours
Cash trumps loan
Lower loan to value trumps higher loan to value
25% down conventional loan trumps FHA, VA or PMI
Likeable buyer trumps unlikeable buyer
No appraisal contingency trumps appraisal contingency
No contingency for buyer to sell property trumps contingency to sell property
Short contingency timelines trumps longer timelines
Quick close usually trumps longer close
Closing sooner offering seller rent back usually trumps longer escrow period
Free rent back trumps paid rent back
Local mortgage broker usually trumps out of town lender
Good local Realtor usually trumps unknown, infamous or out of town agent
No petty requests usually trumps requests for home warranty & extra items of personal property.
There you have it Buyers. Some of the above are entirely in your control. Some aren’t. If you don’t have cash you just don’t have cash. But…in a multiple offer game where so much is out of your control, at least make the effort to play the cards you do have wisely. It will increase your odds immensely.
More next week.