Tips On Making Yourself Most Competitive in a Multiple Offer Situation
With inventory at an all-time low and competitive mortgage rates, Centre County has shifted to a seller's market. If you’re in the market of shopping for a new home, you’ll notice that house hunting has become rather aggressive. Homes selling in a few hours, with multiple offers, $5,000 to up to $20,000 over the asking price, has been an everyday reality in our office. So what can you do as a buyer in a bullish seller's market? Below are a few tips and tricks we have implemented to our buyers with major success in a cutthroat market.
1. Escalation Clause - An additional clause that you can add with your offer on your dream property, a buyer can set forth an amount, for example, $100.00, that you’ll offer to pay over the other offers on the table. Much to a buyer’s comfort, you can set a maximum cap on how much you’ll pay. For example, you can offer to pay $100.00 over any offer up to a maximum purchase price of $155,000. You can also ask the seller to remit the other offers in order to ensure that the price isn’t being driven up.
2. Waive Inspections or Offer a Repair Deductible - Waiving inspections assures the seller that you are purchasing their property without the contingency of asking them to be responsible for repairs. Waiving inspections is a very effective tactic; however, if you are nervous about the home you’re vying for and you’d prefer completing inspections, there is another stratagem that can be both effective and competitive. Proposing an allotted amount, for example, “up to $1,000.00” of repairs that you, as the buyer, will be responsible for, will allow you to make your offer contingent on having your inspections, but not holding the seller completely responsible.
3. Write a Letter to the Seller - There are occasions in a multiple offer situation where we have seen an offer come to the forefront of the competition by pulling the heartstrings of the seller. If the home you’ve selected is a bank-owned property, however, this plan of attack is less effective, as banks are not in the business of having sentiment.
4. Offer Full Price or Higher - The days of getting a bargain in Central Pennsylvania are few and far between. When we can negotiate a lesser amount for our buyers, we do; however, when other offers are imminent, it’s time to break out the checkbook. Ask yourself as a buyer, how will I feel if I lose this home to another buyer? A rule of thumb that helps our buyers see the bigger picture in this situation is breaking down what their monthly mortgage payment will look like with an extra $1,000.00. Note that, on average, every $1,000.00 you add to the price is roughly $5.00 added to your monthly mortgage payment. I think you can cut out a caramel macchiato from your favorite coffee shop to achieve your goal of owning your dream home.
We’ve given you the tips to set yourself up for success in a bidding war. Now follow these steps, cross your fingers (and toes), and get ready to start packing.
Have questions about the current market conditions or would you like to employ a shark from our team to win that coveted address? Shoot us an email, [email protected] or call our office directly, (814) 272-6110.
