Multiple Offers have been pretty common in this current market – good properties are seeing more than one Buyer submit an offer for the Seller to consider, giving the Seller multiple offers to choose from. Often, you maybe read in the listing that a Seller will be looking at offers on the Sunday or Monday after the weekend Open Houses, or the Seller’s agent may decide to go this route after a very busy Open House. This strategy not only allows every interested Buyer a chance to view the property, but also elicits a sense that the property has a lot of interest and it’s “now or never” with the listing.
Multiple Offers can occur whether or not a property is priced below it’s value. A unique unit, in a great location and at a market value price would is something every Buyer is looking for and in an active market like Vancouver, they aren’t uncommon. If my Buyers love a home that is expecting to receive more than one offer, I like to encourage them to submit their own offer because you never know what other parties are submitting and this could be your only chance to buy the home. With proper preparation and mental toughness, a multiple offer situation doesn’t necessarily need to end in the Buyer paying more than they initially wanted too. I’ve actually been involved in a multiple offer situation where every Buyer offered under the list price because the property was priced too high given recent and comparable sales.
Contact us to sit down and chat about buying a home – we’ll ensure you’re prepared and positioned to win in any market.
How to Approach a Multiple Offer Situation
Once the Seller has received all offers, they can (1) decline every offer, in essence, tell every Buyer to improve what they originally submitted, (2) ask a few Buyers to improve their offer, or (3) choose one offer to work with and ignore the other offers (unless the first offer declines the Seller’s advances). Therefore, a Buyer may only have one chance to woo the Seller which means submitting as close to their best offer as possible.
The best way to look at multiple offers is for the Buyer to submit their strongest and best offer considering the market value of the unit, their budget and real estate goals and their emotional attachment to this potential home. Buyers do lose some of their negotiating power during multiple offer situations, but a good realtor will ensure that the Buyer is as prepared as possible and positioned to both win over the Seller while taking care of the Buyer’s bets interests.
How can Buyers Make their Offer Stronger?
There are a few things Buyers can do to make their offer stronger and more appealing to the Sellers. The more of these things a Buyer can do, the more likely their offer will be the one chosen. Though price is king, the more appealing an offer is to the Seller, the more likely they are to take it. Offers that are subject free – as in, when the Seller signs the offer their property is officially sold – are ideal. Here’s how to get there:
1. Do an inspection before submitting the offer: Doing the inspection before submitting the offer allows the Buyer to find out what they need to know about the property and gives the Buyer some time to deal with any issues that may come up. The Buyer can also take the results of the inspection into account when determining their offer price so they can feel comfortable with their offer. The one caveat? Home inspections costs money ($400 for a one bedroom condo, more for larger units) and this is money you won’t get back if you don’t have the winning bid. Offering on a home after the home inspection also shows the Seller that you’re very confident in the unit.
2. Approving all Documentation: Every home for sale comes with documents that need to be approved by the Buyer. For condos, the strata documents need to be read and approved by the Buyer before going forward with an official purchase. Reading these strata documents beforehand gives the Buyers a leg up because they will know how the building is run, what to expect in terms of future maintenance and costs and will have all of their questions answered about whether or not this particular building is right for them. As long as the realtor has the strata documents, we can take a look at them beforehand. If the realtor doesn’t have the strata documents, I’ll do what I can to get as many of them as possible from other agents who have recently sold in the building. For every property, having the Buyer approve (by initialling) the Title, Property Disclosure Statement, and any other important documentation can go a long way.
3. Financing: Mortgages can never be officially approved until there is a specific property in question, which is why you can only get a pre-approval beforehand. You don’t actually need official mortgage approval to buy a home, that’s just typically done before any offer is official for peace of mind. If a Buyer is extremely confident, they can submit their offer with the financing clause and then obtain Mortgage Approval after the fact (I would never suggest this if the Buyer hasn’t been pre-approved). The Mortgage Broker can also run the property through their system to see if they can detect any red flags or issues that may cause difficulties with financing before offering with the clause. Otherwise, if the Buyer isn’t confident enough to offer without the financing clause (and not every should be) then I suggest having your Mortgage Broker write a letter to the Sellers indicating that you’ve been pre-approved and that they don’t expect any issues with financing, we’re only leaving the clause in place for due diligence sake. This can give the Sellers a little more confidence in your offer since financing issues can often kill deals.
4. Deposits: Submitting your offer to purchase, with your 5% deposit in hand can also make your offer stronger. This show that you were willing to go the extra mile to have the funds removed from your bank account so that the Seller can accept your subject free offer without any doubt that it is official.
5. Tugging at the Sellers heart strings: Another tactic seen in multiple offer situations is the emotional side – having the Buyer write a letter to the Seller indicating why they want the property. Whether it’s to raise their young family, or because it’s only a few blocks from their grandkids, or because the Buyers want to upkeep the Seller’s bountiful gardens, tugging at the Seller’s heartstrings can help sway their opinion in the Buyers favour.
6. Using the Seller’s Ideal Dates: Sellers often have preferred dates for when they would like the offer to complete (so they get their funds). The Buyer’s offer will be stronger if they can accommodate the Seller’s ideal dates to make the move a little easier for the Seller. This is especially true if the Seller has already bought their next property and need the move out / move in dates of both properties to align correctly.
7. Your Best Price: Not surprisingly, the Seller’s main goal is to sell the property for the best possible price and often, the offer with the best price wins over, especially if there’s a considerable difference between the first and second highest bid. The Buyer needs to offer their best price in order to have a chance. Keep in mind that emotions often get the best of Buyers in the process, and with the Seller asking for more money, if can be hard to say no when you’re so close. Knowing your ceiling price ahead of time can make this easier.
What is a Buyers Agent’s Role in Multiple Offer Situation?
If you’re the Buyer, it’s my job as your agent to give the Seller’s agent as much confidence in your offer as possible. Some tactics include a personal story as to why you want the unit, mentioning that even though we have the financing subject in our offer you’ve been pre-approved and don’t expect any difficulties with financing, etc.
Often, having a good relationship with the other agent can be very helpful. Say the Seller’s agents has two very comparable offers to chose from – well I can guarantee they are going to chose the offer submitted by the agent who is cordial, accommodating and prepared, and perhaps someone they may have done business with in the past.
Multiple offers aren’t ideal, but with the right strategy, preparation and emotional toughness (so as to not overbid and regret it), you can be successful in any offer situation.
