How To Win In A Multiple Offer Situation

How To Win In A Multiple Offer Situation

Over the last year, properly priced homes have been fetching multiple offers on a consistent basis.

It is, without a doubt, a seller’s market.

In the first month of this years Kingston Real Estate market things haven’t changed to much. Basically, any home that is priced competitively under $400,000 is selling very quickly with Multiple offers for over asking price. In certain area’s in Kingston, such as the downtown Queens and Rideau St area’s properly priced homes are selling with multiple offers in less then a week at prices as high as $700,000 depending on the property.

A sellers market means that there aren’t enough homes available to meet the number of buyers that are looking. This means that when properties do come on the market buyers are competing to secure the property as fast as possible.

I have talked to a few buyers who tell me that they don’t want to get in a bidding war! Well unfortunately, the reality is that if you want to purchase a property in a sellers market then you are going to have to be prepared to compete with other offers, to purchase a nice home. Otherwise you will be left with the scraps.

There is a Difference Between Paying Over Asking Price For A Home and Over Paying For A Home!

I can understand why some would not want to get in a bidding war.  However, there is something that you need to understand. Paying over Asking price does not mean that you are over paying for a home? If you have a good agent, they should be able to advise you on what they think a fair amount to pay for the home is. Also, be able to advise you on what the property may be worth down the road.

Prices in Kingston went up 10% in 2018. So, let’s say a place was listed in January last year for $325,000 and you paid $13,000 over asking price or 4% over asking price for a final sale price of $338,000, by the end of the year your home was still worth $19,500 or 6% more then what you paid to bring it’s estimated value to $357,500.

Plus, this scenario would likely secure you with a great property that you didn’t have to sink a ton of money into. You would also know that it was clearly highly sought after and should be easy for you to sell down the road should you maintain it.

Paying Over Asking For A Property Isn’t The Only Way That You Can Win in a Multiple Offer Situation.

There are many other factors that a seller looks at when deciding which offer to deal with. They obviously want a high price but the closing date and buyers conditions are also important.

• Closing Date- You can save the seller a lot of grief if you are able to close on the day that they would like to close. This can save them money in storage costs, hotels, travel etc.

• Buyers Conditions- Typically Financing and a home inspection are the two main ones.

Let’s tackle Financing first.

Most standard real estate offers will have 7-10 days for the buyer to obtain financing approval and to do a home inspection.

This protects the buyer and I include it in all of my standard Kingston real estate deals. The buyer has 7-10 days to obtain financing approval and to do a home inspection of the property. If for any reason the buyer is not satisfied with the results of the home inspection or is unable to obtain financing. Then they can back out of the deal and get their deposit money back.

In a sellers market this is obviously something that a seller wants to avoid. Sometime a seller will even take a lower offer if it does not have a financing or a home inspection condition because they do not want to take the risk of tying up there home for 10 days only to have the buyer not be able to satisfy their conditions and back out. This kills all momentum that the property had when it came on the market. When this happens they have to go back to those other buyers that didn’t win the multiple offer situation and see if they are still interested in the home. This hurts the value of their home. So, price is not the only thing the seller considers. Having no conditions could be worth a couple thousand dollars.

Here Is What You Can Do To Win Your Multiple Offer Situation.

1)The most important thing you can do is get a pre-approval from your lender telling you exactly what you qualify for! It is very important that you are honest with your lender and provide them with all the documents that they need to approve you ahead of time. Employment letters, T4’s, Etc.

If you are clear on how much you can afford then you can confidently go into a multiple offer situation knowing what your budget is and what you qualify for.

2)Shorten your Buyers Conditions as much as possible.

In an ideal world if you don’t have any conditions then that will put you in a good position that will allow you to give a very competitive offer. However, if you do need time to do a home inspection or for financing you will want to shorten it to 1-2 days.

A lot of people don’t know this but If you really want to do a home inspection on a property that you know will go into multiple offers, then you can book your home inspection before the offer process. This way you know ahead of time whether the home meets your standards and if it does then you don’t have to include it as a condition of your offer, making your offer much stronger.

3)Before you submit your offer ask your agent to find out exactly what closing date the seller would like and try to meet or choose a date as close to it as possible.

4)Finally, you need to have a strategy in place to find out when homes that fall within your search criteria come on the market and be notified as soon as possible.  You want to beat all other potential buyers to the property.

Really you can not do this unless you have the help of an agent. Agents find out about potential properties before they come on the market through connections that they have in their offices, inside information they have about future sellers that have contacted them about putting their home on the market, and with conversations and relationships that they have built with other agents. A good agent checks every couple hours to see if any new properties have hit the market that may suit their clients needs.

I have a couple other tools that I can offer you for free to help you be the first to know about new properties.

• I can set you up on your own private web search portal so that anytime a new property within your specified price range, number of bedrooms, bathrooms, sqft range, neighbourhoods come on the market you can get an email notification immediately of it before it goes on MLS. This will save you time from having to search on your own every so often.
• You can download my real estate app on your phone. This is the same App I use to keep an eye on new properties on the regular. You can download it at www.kingstonrealestateapp.com Once downloaded you can communicate with me directly.
• Schedule a simple strategy session with me. Schedule a quick 10-15 minute chat where you can get on the phone, speak face to face at my office, or face to face on the over the computer. During this call you can tell me your wants, needs, timeline and anything else that may help me understand your situation and at what part of the journey you are on. From there I can recommend the proper steps or action plan for you moving forward to get your ducks in a row and put you in a position to find that perfect house for you!

I hope that you found this valuable. Feel Free to share it with anyone that you know who would benefit from this advice. If you have any questions about Kingston Real Estate, you can contact me at jason@realtysource.com or call me directly at 613-888-6567.