Let’s face it. Being a buyer or a buyer’s agent in today’s sellers market is not for the weak in mind or spirit. Often new listings will have multiple offers within hours of hitting the market. Many buyers will make offers on several different properties before finally securing the one that becomes their home.
The Collin County area is one of the hottest growth areas in the nation. According to Collin County government website, over 60 families are moving into our area every day. According to the multiple listing service there are approximately 24 to 50 new listings a day in Collin County. Major corporations like Toyota are relocating to the area and bringing thousands of employees with them. So it is easy to understand why there are many more buyers than there are sellers.
I have helped hundreds of buyers and sellers through the years and I have a few strategies to help buyers win offers in a multiple offer situation.
Home Buyer Strategies to Consider
Finding the Right Home
I think it is important for buyers to have a clear vision of their “must haves” and their “wish list”. Must haves are things that are non-negotiable. For instance, if a buyer “must have” a master on the first floor of the home then it is best not to look at homes outside of that criteria. If a buyer decides to look outside of their “must-have” criteria they take a huge risk. While they are looking at homes that will not work someone is looking at and buying the home that will work. The less “must-haves” a buyer has the more options are available.
Buyers Must Have a Strong Approval Letter
I recommend that buyers meet with a lender before they even look at their first home. It is important to understand how money is required down, how much the buyer closing costs are and what the loan requirements will be. Make sure that the lender has pulled a credit report and can state in the letter that the buyer is credit qualified. Buyers will be competing against other buyers and many of them will be paying cash for the home or be putting down very large down payments. It is important that the buyer’s lender clearly communicate the buyer’s ability to qualify for the loan. As an agent, I ask my clients to provide a recent pre-approval letter from the lender prior to looking at homes. If a buyer is paying cash then it is critical to have the proof of funds before making any offers.
If a buyer really wants a home then it is important to present a clean offer without a lot of special requests. Before putting additional requests into the offer, ask yourself if you are willing to lose the home if the seller doesn’t agree to repaint the secondary bedroom or steam clean the carpets? If you must have the carpets cleaned or you will not buy the home then by all means put that in the offer. Just be aware that the seller may pass on your offer and go with the one where they don’t have to do anything extra.
Highest and Best
It is imperative that the buyer put in their highest and best offer when making an offer in a multiple offer situation because there may not be another opportunity to increase or change their offer. I advise my clients to make the offer so that if they found out later that the winning offer was only $100 more than theirs that they are okay because they know that they went as high as they were willing to go.
How High is too High?
Sometimes buyers will get into bidding wars and will make offers on homes that are way over the current market value of the home. Some buyers really want a particular home and are willing to pay more to secure it. I advice my buyer clients of the current market value so that they can make an informed decision before making the offer. Some sellers will ask that the buyer will agree to move forward on the sale regardless of what the appraised value of the home is. The buyer should be clear about what this means to the buyer. This means that the buyer will be paying cash for any differences between the sales price and the appraised price.
What Do Sellers Want?
I found that most sellers want to be confident that the buyer will close on the home when they said they would. That is why a strong letter from the lender is so important. Sellers want to get at least their asking price. It surprises me when a buyer wants to make an offer lower than the asking price when there are multiple offers on the property. Overpriced homes generally do not receive multiple offers. If the home has multiple offers then it is priced well.
What Realtors Can and Cannot Do
Agents cannot control the market. We only interpret and explain the market so that buyers and sellers can make informed decisions. Sometimes it’s a buyer’s market. Sometimes it’s a seller’s market. It is never both at the same time. Agents have a fiduciary responsibility to their clients. My job is to find out what my clients want and do my best to help them get it. We are required to be honest, fair, competent, and loyal to our clients. Sometimes this means that I have to say things to my clients that they may not want to hear regarding the current market conditions. Sometimes this means that I remind buyers that a “win” isn’t always getting the best “deal” in terms of price. Very often a “win” is being able to close on home with one or two of your “must-haves” with a historically low interest rate in a very high demand market.