Winning in a Multiple Offer Situation
In a market with tight inventory (fewer homes, more buyers), sellers tend to have more power in the transaction.
It’s becoming common for sellers to receive multiple offers on their home, and buyers are having to find creative ways to stand out from other offers.
Here are some of the ways we've helped our buyers stand out and “win” in multiple offer situations:
Come In Strong
When it comes to a seller’s market, buyers have to realize that the seller holds most of the cards, and if there are multiple buyers clamouring for a home then, the seller has all of the cards.
Buyers always ask, “what do you think I should do?”.
Well, after confirming that the actual asking price is a good price per the comps, we tend to recommend to come in with the highest offer they feel comfortable with, and at which price they won’t be upset for losing it. Meaning, if they want to offer full price and they know that is the highest they will go, then offer it.
We don't want a buyer saying “darn, I wish I would have offered $5k more” when that’s what would have gotten the deal done.
PRO TIP: Ask yourself if you would be upset if it sold for $1,000K more, $2,000K....$7,000K until you honestly would not be upset if you did not win!
Know The Property...Really Well
Know as much as you can about the home before putting an offer in. The more you know, the better off you are in case the offers go above asking price. This way you’ll feel more comfortable knowing the “actual cost” of the home in terms of maintenance and monthly expenses.
PRO TIP: Request a list of repairs made during the Sellers ownership and look at ages of the roof and HVAC system.
Find Out What The Seller Truly Wants
People think multiple offers come down to the best price and that’s not always the case. We have had instances where the seller put their home on the market in March and didn’t want to move until June. Guess what? It was more important to her that she didn’t move twice rather than the price she walked away with. To them, there was no amount of money worth moving their family into a short term rental. They didn’t end up taking the highest price, they took a good price but also the one who let them rent back for 3 months.
Tie Doesn’t Go To The Runner, It Goes To Who The Seller Likes More.
The seller needs to hear from you.
I don’t mean in a phone call or without your agent. Back in the day, we used to have a buyer write the Seller a letter and make sure to include all of the great things you like about the home, telling them your plans (without bashing the condition), including a picture of your family or animals. Today, you can achieve the same result by telling your Realtor® what you truly want to express to the Seller and having it expressed to the Seller at the time of offer presentation.
Figure out who the Seller is. When you are a seller, odds are it is still an emotional time of your life. Many sellers want the next buyers to love the house as much as they did, they want them to enjoy the memories they had. So be conscious of this.
Be Prepared And Come IN Unconditionally.
Multiple offer nights are as stressful to the Seller as it is to the buyer. To reduce that stress and gain confidence with the Seller make sure you can put forward an offer without contingencies such as financing or inspection. The winning difference between two offers with identical price will almost always come down the terms you put into your offer. Do your homework before you put forward any offer.
PRO TIP: Having your Realtor® work closely with your mortgage broker and sending MLS information sheets for them to review prior to putting forward an offer will give you more comfort knowing likely you will be approved for the purchase (it is always recommended that a financing clause be used when in doubt about your ability to secure financing to close.
PRO TIP: Work with your Realtor® to have their trusted home inspector provide a thorough report on the property. Don't just rely on the Seller's pre-sale inspection report.
PRO TIP: If you're planning on buying a Condominium then request the Status Certificate to review prior to putting forward an offer.
Deposit Talks... 🐂 Dung Walks
In Toronto, it is typical to see offers with a 5% deposit of the final purchase price to be held in trust until closing by the Listing Brokerage. Deposit amounts speak volumes to a Seller. The larger the deposit the more confidence the Seller will have towards your ability to close on the property. After all, what buyer would want to risk a large sum of money without knowing they can close on the home.
Strong deposits almost always win the Seller's attention and view your offer with more confidence.
PRO TIP: Consider putting forward 10% or more if the money is accessible and not required before closing.