If you’re house hunting in today’s seller’s market, you’re likely wondering what are the best ways to win a multiple bid in a hot housing market. How do you know we’re in a seller’s market? Some hints of a power seller’s market:
1. Low housing inventory
2. Increased amount of home buyers in the market
3. Realtor asks for highest and best deadline
4. Homes in area are closing at over original list price
5. Days on market is SHORT
Don’t despair. In this market, it may take multiple offers before you can win a bid on a house, so continue to preview homes and offer wisely.
Sharpen your e-signatures and let’s walk through the offer process in a multiple bid situation.
Step 1 Select an agent
Deciding on an agent is important in finding the right home and in some cases in winning a multiple offer bid situation. Is your agent organized and seeking to work for you? Does your agent understand urgency and adept at assembling an offer contract package in an efficient and professional manner? Does your agent utilize e-sign software? Sometimes, the speed at which an offer package needs to be written and submitted is expedited with e-signatures.
Step 2 Gather your pre-approval letter
Technically, you would’ve obtained your pre–approval letter, however ensure it is updated and forwarded to your agent.
Step 3 Identify house of interest
You’ve toured the home with your buyer agent (realtor/broker) during a public open house and/or through a private viewing and identified a home that checked off your home search criteria. From here you will want to ask for a copy of the multiple listing service (MLS data sheet), seller disclosure of property condition report (if applicable) and lead base disclosure if the home is built before 1978.
Follow your due diligence and read all the disclosures carefully. The seller disclosure will reveal structural, plumbing, electrical, age of roof, details on attics, basements and crawl spaces; any past termite or wood destroying insects; any additions/remodels; heating and cooling, environmental hazards and other pertinent data points. Note: it is not mandatory for a seller to complete a seller disclosure and sometimes aren’t utilized in newer condominium/co-op or townhome units.
Step 4 Review comparables
Take the guesswork out and don’t solely rely on online data because some of the data are off market listings or worse sales from a year or 2 ago. Your agent will provide a list of recent comparables (active, under contract, under attorney review and sold listings) within the last 3-6 months. This will help you review the figures and properties in relation to value. If you see similar homes selling above asking in under 30 days, chances are the home you are bidding on may yield an over ask sale price.
Step 5 Decide on offer price/terms
After you’ve reviewed the disclosures and comparables, consider your offer. Did the seller’s request a final highest and best by a specified deadline? If so, review the recent sold homes in the area and see how much over asking the property went for. Craft your best offer price, closing date and down payment. Many think the highest offer price will win the bidding war, however sometimes it’s a strong down payment and a competitive closing date. Remember you may be competing with all cash offers. In this market, cash can be king.
Step 6 Waive contingencies
Whoa! What does waiving contingencies mean? In brief, it can mean not having any outstanding item that would impede or slow down a sale. One such example is if you need to sell your home in order to purchase the prospective home. Seller’s prefer if you can purchase a home without having to sell your current home. The other is in a multiple bid situation, the seller may ask the buyers to waive the appraisal contingency. Plain english meaning? If the home under appraises to what you had offered, you may need to pay the difference in order to get the loan. That is a personal decision that surely will win you the bid, however do you want to overpay if the appraisal came in lower that what home may be worth? Or do you expect the area to experience continued home price appreciation in the housing market and therefore paying the difference wouldn’t make a difference. It’s your decision as to how much you want the house.
Step 7 Be flexible
Convey to your agent that you’re flexible with closing dates (that is if you truly can).
Final step
Now try to relax! After all if it’s meant to be your home, you’ll win the bid. If you do, CONGRATULATIONS! You’re about to be a homeowner! If your offer isn’t selected, don’t despair! The right dream home will present itself to you in due time.
Meanwhile, happy house hunting. Enjoy the journey.
