Multiple Offers On a Home: A Buyer’s Guide to Winning

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The Buyer’s Challenge

“We have multiple offers on the home, so give us your best and final by Monday morning”.

This is very close to the statement that the listing agent told me the first time I was helping a client write an offer on a townhome in Fairfax.

That was in 2013. It would be far from the last time I dealt with competition on a home.

After that, real estate both locally and nationwide went through a prosperous time fueled by low interest rates, lots of buyers looking for homes and not enough for homes for sale.

Multiple offers are common in high demand, low supply housing markets.

However, multiple offer situations happen in any market. All it takes is a home that offers you great value. A great location, great price and nice updates compared to the rest of the market.

A large luxury kitchen, the bar has a small built in table coming off it, stainless steel appliances, light wood floors, white cabinets with dark hardware.
A kitchen masterfully done by Reel homes. Homes that are more updated and better priced than the competition tend to attract multiple offers.

Many times more than one buyer wants that home, and boom, you find yourself competing.

I learned early and often how to navigate, and very often help my clients win, multiple offer situations.

If you are going to be buying a home, and see homes online getting contracts fast and offer deadlines set, this guide is for you.

For a more in depth look at home buying, see my home buyer’s guide.

Below are the 5 steps to getting an offer accepted by a seller.

1. Find the Right Real Estate Pro

The buyer’s agent you have working with you will be the point of contact between you and the other parties (seller through their listing agent).

You want to find an agent who has experience in a competitive market. Who can confidently tell you some strategies that can help get your offer ahead of the others.

“Selling” Your Offer

My clients have had offers accepted that were NOT the highest net to the seller.

How is that possible? I was able to explain how our offer was more likely to close, which would save the seller time and that ultimately working with my client would be the simplest way to the closing table.

Keep in mind, there is no experienced agent who can say that their clients have won every offer they have written.

But you want an agent who believes in your offer and wants to make that deal happen for you.

This includes small things like writing a cover email to the listing agent explaining why the seller should sell to you.

A grey home with a light grey roof, and an orange door. Slightly overcast day in late winter, but green grass can be seen on the lawn.
This McLean VA home had multiple offers, which my client won using many of the strategies discussed here.

Agent’s Current Market Knowledge

The agent you choose to work with should be on top of the local real estate market. Financial markets change with many different factors. A good agent stays on top of what is currently going on in the market.

This will help you know what kind of market you are buying into, and what you need to prepare for.

The housing market in McLean could have low inventory and lots of competition. One town over in Great Falls the listings could have room for negotiating.

These kinds of nuances are hard to know without being involved day in and day out, and making sure to do your research.

Trust

Being able to trust your real estate agent is a huge factor in getting a home.

Your agent should put your goals ahead of the sale, always. And communication throughout the real estate transaction is crucial.

2. Get Prepared Ahead of Time

The process of writing an offer can go very quickly. Especially for a popular home where you will be competing.

If you are going to look at homes, and are planning to buy, it is a good idea to get ready ahead of time.

When you find the right home, you want to be ready to strike quickly and get an offer in.

Scrambling to get everything that you need at the last minute can mean you miss an offer deadline.

Which Lender Do I Choose?

There are a lot of good lenders out there. I have worked with small local lenders, large banks and online based lenders.

My experience is that for purchasing a home, a small local lender has gets the best results.

The reason for that is two fold. First of all, listing agents (representing sellers) prefer local lenders. They are more responsive and have better access to the different phases of the lending process. This gives the seller and other agent peace of mind.

Secondly, the process is on average more smooth for you as the buyer. You will have better access to your loan officer and a feeling that you can get answers about what is happening with your loan.

You have a choice in lenders, and it is ultimately up to you. You can even interview more than one and switch.

But my extensive experience with competing offers has shown that going with a smaller local makes a big difference in getting a contract accepted.

Atlantic Coast Mortgage is one of many solid local lenders in Northern VA. “It’s all done in house” refers to the fact that all their staff including underwriters operate closely together at the same company.

Pre-Approval Letters

A pre-approval letter is issued after a lender reviews initial financial documents (i.e. W2s, 1099s, tax returns) and also analyzes your credit and debts.

There is also a letter than can be issued just going by what you have told the lender about your finances (no document review) and pulling your credit. This is sometimes called a pre-qualification letter.

If you are competing, take the time to get the pre-approval letter. This tells the seller that the lender has gone through your documents. That is a big deal for avoiding surprises later.

Cash is King (But Not Always)

If you do not have a loan and are paying cash you have an advantage. There is always risk of a loan not getting approved. With a cash offer this risk is eliminated.

Cash offers with similar other offer details to a financed offer will usually come out on top. But paying cash does not mean you will win every time you compete.

If a buyer with a loan offers more money, less other contingencies or gives the seller what they need (rent back, delayed closing date) that contract with the loan may still win.

That is something to keep in mind whether you are paying cash, or competing against cash offers.

Selling Your Home to Buy Another

You may need to sell your home in order to have funds to close on your new home. There is a few ways to navigate this issue.

A “home sale contingency” in an offer says that you will buy the home as long as your home sells. In a multiple offer situation, this is very unlikely to get accepted.

The best option is to get your home on the market as soon as you know you want to move. If you can get a contract on your home you could use a “contingent on settlement” instead. This is easier to present to the seller.

In the most competitive of markets, sometimes it takes closing on your home, getting a rentback or finding a temporary living situation to get the next one.

3. Make A Plan

Once you find a home that you want to write an offer on, your agent can find out if there are multiple offers.

Now it is time to develop a strategy for the home based on the number of offers, property and seller.

How Do You Really Know if There are Multiple Offers?

Agents are bound by a code of ethics that would prevent them from flat out lying about the presence of offers.

It is possible that their agreement with the seller states that they may not be able to disclose whether there are offers or not. This is rare, but in this case they would just say they cannot disclose it.

But in most cases the question of whether or not their are other offers is answered with how many offers they have.

Focus on the Seller’s Needs

What is important to the seller? Maybe they have already moved and want to close as quickly as possible. Maybe they need a rent back for 60 days. Or maybe they have a title company in mind they want to use.

Whatever it is, make it happen. Obviously, most sellers are motivated by price and also how likely a contract is to get all the way to closing with minimal hiccups.

But reflecting anything that would make the seller’s life easier into the contract form is even better.

For example, they ask for a 2 week rent back period? Throw it in for free. They want to take their chandelier and put in a cheaper one? Tell them no problem, no need to replace it you will have one installed after closing.

Dealing With Offer Deadlines

If there is an offer deadline, most offers come in right before the deadline. So waiting to submit your offer until right before the deadline can be a good strategy.

This will give you a better idea of how much competition you are up against.

But in a competitive situation putting your best offer forward can be done at anytime.

Sellers can also change or rescind a deadline in Virginia. But the listing agent almost always will let all interested parties know so you can get your offer in before a decision is made.

Review Comparable Sales

Looking at what properties have sold nearby for gives you a good basis for what the home you are offering on is worth.

This is an important step and helps you make a more informed decision. Look at what other people have paid for homes around the neighborhood your prospective property is in.

A good agent will find and send you these comparables. Now ask yourself and real estate pro, has the market changed since those closed?

Sometimes you are in a market when prices are going up. This means you may have to bid more than what the previous sales have been to get the home.

Looking up comps gives you hard numbers to work with. Then you can come up with an offer that is based on facts and also how much you want the home.

Wildly overpaying for a home because of a frothy bidding war is not a very financially smart move. Looking at this data keeps you level headed.

4. Crafting a Winning Offer

The time has finally come to put pen to paper (digitally speaking) and get an offer together to submit to the seller.

Here are some aspects of the offer and how they can be more favorable for a seller.

Deposit

Most contracts will have a deposit that is held by a third party in an escrow account to be released at closing back to the buyer.

This deposit shows the seller you are serious, as you are willing to put this money aside.

The seller also can attempt to collect this money if you default on the contract (not settle without a legal way to void the contract).

Down Payment

Higher down payments are usually seen by the seller as more favorable in multiple offer situations.

This is because a higher down payment means that you have more cash on hand, so you can weather any issues with appraisal.

Sellers also may perceive that buyers with higher down payments will have an easier time with the loan approval.

If you do not have the cash for a high down payment, you can still win. But it will be considered, so you may have to concede and stand out elsewhere.

Settlement Date

The faster the settlement, the less time the seller has to pay taxes, utilities, their mortgage, etc.

This is why often sellers request as quickly as possible a settlement date. Check with your lender how quickly they are able to get your loan done.

Home Inspection Contingency

The home inspection and negotiations that happen right after can be a real pain point for the seller.

So what can you do to ease that worry? In a competitive environment, you can decide to do an inspection, and waive the negotiation period.

This is also known as an “as-is” inspection. If something is majorly wrong with the home, it still gives you a way to void the contract. But the seller knows you will not ask them for repairs.

Now, in a very competitive environment you may go up against buyers who waive this contingency all together. You do have this option.

If you are very handy and have knowledge about homes this could be on the table. Maybe the showing of the home was all that you needed.

Another option is to ask the seller if they will allow you to do a “pre-inspection”. This consists of you bringing an inspector over to see the home before you write an offer.

Yes, you will have to pay the inspector, and also the seller has to agree, but this can allow you to then go in without a home inspection contingency.

Sometimes, having a seller let you in to do a “pre offer” quick inspection can allow you to go in without a contingency.

If you do have a home inspection contingency, make the timeframe as short as possible. A 3 day contingency looks better than 7 in a multiple offer situation.

Financing & Appraisal Contingency

If you are getting a loan, you will have to navigate these contingencies also. This is where cash gives an advantage, as it eliminates them together.

Have a serious talk with your lender. Ask them how quickly they can close the loan, and how easily you will qualify.

You can make the finance contingency short if you are working with a lender who has a good track record of closing fast.

Just like other contingencies, in the most competitive markets buyers waive this contingency despite having a loan.

This can give you a leg up on the competition, but if you do go that route and dont close you will be in default of the contract. Even if you do not close because your loan does not get approved.

The appraisal is another sticking point for sellers. You can ask the lender about getting an appraisal waiver if you have a high down payment.

An appraisal can also be partially waived. You just will need to contractually guarantee you will come up with the cash difference between the appraised price and contract price up to a certain appraisal price.

Having a look at the comps can help you determine how likely it is you will have to deal with appraisal issues.

Writing a Letter to the Seller

I have had a letter to the seller make the difference and win them their home. Even when another offer was potentially stronger numbers wise.

In most transactions, this is likely your one chance to have personal communication with the person making the final decision of what offer to choose (the owner of the home, of course).

Letters work best when it is a owner who lives in the home, even better if they have been there for some time.

My advice for letter writing: make it genuine and honest, not overly sappy or dramatic. However, do not be afraid to ask the seller to consider you as the new owner.

They want to know you will take care of their home, that it will be used to make memories for you and whomever will live there.

If the home belongs to an investor, builder or bank I advise to skip this step.

A letter can sometimes have the opposite effect of annoyance for those solely motivated by finances.

Escalation Addendum

The escalation clause should be your weapon of choice in a multiple offer situation.

What this clause says, is that you will pay (x) price for the home. If someone else bids more than that, you agree to increase (x) to beat by the other offer by (y) dollars up the max amount of (z).

Offer/PriceEscalation MaxIncrease by Final Price
#1(yours) $660,000$700,000$4,000$689,000
#2 $673,000$680,000$3,000$680,000
#3 $685,000(none)n/a$685,000
Escalation clauses in a table of 3 different competing offers.

Look at the table above. You put an offer in for $660,000, but stated you would go up to $700,000 if there was another offer to “trigger” you that high.

In this example, offer 2 also had an escalation. They got beat out however, by offer 3. Your escalation clause beat offer 3, and since you agreed to beat the other offer by $4,000 it put you at $689,000.

Your offer would most likely be chosen here (obviously if all other contingencies are equal). Not only that, but you save $11,000 had you just outright said you would pay $700,000.

On top of the that, the seller agrees to show you the offer that triggered your escalation clause. So you get to verify the next best offer.

5. Winning

Once you have your contract all signed and ready to go, it is time to go get your home.

The Total Offer Package

The offer will be submitted by your agent to the listing agent, for the seller to review. Legally the listing agent has to present all offers.

Before it is submitted, ask yourself if there is anything else you would do, that is not reflected in the offer.

Depending on how many offers there are, you want to put the strongest offer you are comfortable with and as few contingencies as you are willing to go forward with.

Make sure the letter to the seller is included, if you wrote one. A good buyer’s agent will combine it and make it one file with your offer. This way it does not get pushed to the side.

When You Will Get an Answer

If there is a deadline, usually you will hear back fairly soon after that. If there is not a deadline, there is no set timeframe to hear back in Virginia. This varies by state.

Most sellers formally respond to offers within 48 hours, but could be longer or shorter.

Final Negotiations

After you submit your offer, if you are being considered by the seller there may be some final negotiations.

Even with multiple offers, sellers can counter an offer on any terms. They sometimes even will go back to multiple parties if they do not get what they want from one.

If this happens, be ready. You can negotiate if the terms are acceptable. Don’t let the desire to win blind you into spending way more than you are comfortable or conceding beyond your highest and best.

However, in most cases a small concession at the final hour can make or break you getting the home.

Acceptance!

This is a good sign to see when you are the buyer that caused it go up.

The day is won when your agent delivers back to you a fully signed contract, initialed on all terms by both you and the seller.

A seller may commit verbally first, but make sure to get it in contract form before you start the celebration.

Congrats! Get out and unwind, this process can be stressful but it is worth it to get a home you will own for years to come.

Competing Offers

If you had an escalation addendum, you will be able to see the closest offer that you beat out.

If you did not, you likely will not see the competing offer that came in second. This is true for Virginia, but will vary state by state.

Learning From Losing

If you did not win the home, there will be another. The agent should thank the seller for their time, and then ask for feedback on what caused them to choose another offer over yours.

Take this feedback to heart. You will want to learn from the loss and learn what is in your control to do next time and so you can get home.

Sometimes, there is nothing you can do but move on to the next property.

There are lots of homes for sale in Northern VA at any given time. Another will come up you feel the same way about.

More Tips for Winning

Here are some more general tips for winning a multiple offer situation.

• Keep a calm, open mind. Figure out the small things you can do to make your offer better for the seller.

Inconvenience yourself. Tight timelines, limited contingencies can be a nuisance with scheduling and your budget. But sometimes that is what it takes in a market with low inventory.

Use cash, then refi. If the rates are low and you want to take advantage, you can always do a cash out refinance after closing. Cash offers and offers with higher down payments appeal to sellers.

New townhomes being constructed in Loudon County. I have often found clients inventory from builders when the market did not have much for sale.

• Check out new construction. If there is such low inventory you can’t find what you want, ask your real estate agent to see if they know of any new homes coming up or new home communities. If you can wait for construction, this could be the answer for you.

Use the escalation addendum. See above about this. It will help you get the your last word in without putting all your chips in upfront.

• Be patient, then move quickly. If the market has low inventory, homes will come up for sale. Once one does, be decisive and strong with your offer.

• Learn from losses. Do not worry about missing a home, another will come along. Sometimes losing in a competitive market is part of the process.

Conclusion

Dealing with multiple offers can be daunting. Having to offer on homes with multiple offers more than once can be downright frustrating.

But with the right plan, the right team in place and a persistent attitude it is just a matter of time before you will get a contract accepted on a home.

If you are in Northern VA, reach out to me if you are starting the process of searching for a home.

Will Rodgers

Will is an award winning real estate agent, author and high tech marketing expert. Adopting a consultative approach he has helped hundreds of clients meet their real estate goals in the Northern VA real estate market.

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