How to: Win a bidding war.

I have been neglecting my blog lately because I have been so busy. The market has been insane lately here in Houston, which is a great problem to have as a realtor. In the past three weeks we have put 9 homes under contract, totaling in over $7 million in escrow right now. If I had the time, I would calculate how much money we are saving our clients in commission rebates, but time is precious and I don’t have that luxury right now. It would be a LOT though.

 This crazy selling environment has led me to write this post. In the past few weeks we have been on both sides of multiple offer situations. I want to give buyers some tips on how to present a strong offer in the event that there are multiple offers being presented on a particular property. If you are a seller right now, pay attention to this as well. It’s not ALL about list price.

 1.       Price - Ok so I just said it’s not all about price, but let’s be real here. Price is going to be the first thing a seller looks at. In the event that a home just came on the market and there are multiple offers, you need to offer list price or above. Yes, or ABOVE. With that said, please listen to your realtor and carefully review the comps that are available. If you are uncomfortable paying list price or above because you don’t think the value is there then offer what you feel is appropriate. Just don’t get super emotional about it and try to outbid everyone else. If it goes for a price higher than your feel is appropriate, let this one pass.

2.       Close Date – Your realtor needs to speak with the listing agent and get the seller’s “story”. Find out their time frame on moving out and what their ideal close date would be. If the seller has already purchased a new home and can close as soon as possible, then take that into consideration. If the sellers are building a home and it won’t be completed for two months, take that into consideration as well. To the best of your ability, make the close date appealing to them and make sure your realtor relays that you are trying to accommodate them…”My clients are allowing the sellers to lease back the property for two months while their new home is being completed”.

***From the seller’s perspective – Let it be known when you want to close! People will bend over backwards to make that happen right now if they really want your house.

3.       Option Money – This is a fee that is given to the seller from the buyer and is non-refundable. You are basically paying for the right to take this house off the market while you inspect it and make sure you really want to move forward. Present a large option fee knowing that if you back out you will lose this money. Typically on a $500K home, a buyer might offer $150-$200 as an option fee. In this scenario, I would suggest increasing that to $600-$700 to show the seller you are serious about this purchase.

4.       Earnest Money – The earnest money is refundable if you terminate the contract within your option period. Make this a high number too! A typical earnest money check would be for 1% of the price of the home. Increase it to show you are a serious buyer.

5.       Option Period – The option period is typically anywhere from 7-14 days. This is the time in which you get the home inspected and have the undeniable right to terminate the contract for any reason. Keep this number as low as possible.

***From the seller’s perspective – The option period is a time when your home is basically taken off the market to other potential buyers. In the event that your buyers terminate the contract, wouldn’t you rather they do it after 7 days versus 14 days?

6.       Non-realty Items – These are items that are not fixtures to the home. So for example, refrigerators, curtains, washer/dryers. Have your realtor ask what your sellers plan to leave behind. If the listing agent says the sellers plan to take their refrigerator, then don’t present an offer asking for it.

7.       Warm fuzzies – Make sure your realtor presents a nice, strong cover letter with your offer. Let it be known to the sellers why you love their home so much…it is very well maintained, decorated beautifully, on the exact block I have always want to live on, I can’t wait to raise a family here, blah blah blah. Give some information about yourselves…we are native Houstonians and got married two years ago, blah blah. People want to feel GOOD about who is buying their home. They love their home and don’t want to think some jerks are buying it.

The takeaway for sellers- don’t JUST look at the list price. There are other to items to consider if you get mutliple offers on your home.

 I know this is a lot of information and it isn’t always possible to adjust everything into a perfect scenario for a seller. But if you really want that house, I would take all these tips into serious consideration. It’s crazy out there right now so stay on your toes if you are a buyer and looking in areas like West U, the Heights, Memorial, Spring Valley, Wilchester, Montrose, and Southgate. And lastly, TRY not to get your panties into a wad. Keep your wits about you, another home will come along, and trust your realtor. Unless you don’t trust your realtor – then call me!

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