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Do you do anything differently when you're representing a buyer in a multiple offer situation? My first couple multiple offer situations last year my clients lost, and the last few towards the end of the year they won. I usually recommend they write a letter to the seller which pretty much butters up the seller. They'll say things like how they can tell the property was well taken care of, compliment the rose bush in the front yard, it was probably a great home raising kids and they can't wait to do the same (if there are pictures of the kids throughout the house), etc. I've heard others say that this gives the sellers negotiation power, but I believe otherwise. How do you guys handle YOUR multiple offer situations when representing the buyer? Do any of you use an escalation clause?
I use an escalation clause when the situation warrants. I will normally ask the listing agent if they want "highest and best" or escalation.
Sometimes we use a letter to the seller.
Tighten up contingency time frames.
Offer rent backs
Frankly I hate multiple offer situations but I get why a listing agent would LOVE them.
1. If the client can do all cash, I strongly recommend that they make that part of the offer. They can still do financing, but they need to understand that they are on the hook for cash if the financing falls through.
2. Escalation clauses are difficult - no one trusts them.
3. Never had a letter that actually worked. Sellers seem to be focused on the bottom line, but hey, it's worth a shot.
4. Minimal deadlines -- quick inspection, quickest appraisal possible.
5. Flexibility on closing date, free temporary occupancy.
6. Include a stip that after the contract goes binding, the listing agent must submit a copy of competing offers within 48 hours. Keeps everyone honest, but you get some pushback, especially if one of the competing offers becomes a back-up offer.
7. Go over your comps with a fine-tooth comb. All that MO back-and-forth, and the winner may end up getting the home for less, anyway, if the appraisal comes in below sales price. (If a listing agent suspects that might be a problem, it might be time for a special stip that nullifies the ability to go back after an appraisal and ask for a lower price. While that might not fly with many purchases, if it is a highly desirable home, it might be worth a shot.)
Honestly, I almost prefer being the backup on a multiple-offer situation. The first buyer is usually ticked off that they were sucked into a MO situation, and gets demanding after inspection -- the seller is more likely to walk if they have a back-up and the buyer starts making demands.
Honestly, I almost prefer being the backup on a multiple-offer situation. The first buyer is usually ticked off that they were sucked into a MO situation, and gets demanding after inspection -- the seller is more likely to walk if they have a back-up and the buyer starts making demands.
I thought this was funny and true. I have had some winners be completely irritated because they feel that they got caught up in the moment. It's like going to Vegas.
Honestly, I almost prefer being the backup on a multiple-offer situation. The first buyer is usually ticked off that they were sucked into a MO situation, and gets demanding after inspection -- the seller is more likely to walk if they have a back-up and the buyer starts making demands.
It's amazing how often that happens. Another agent in my office had a listing a couple of years ago that got 6 offers. I believe she ended up going through each offer until finally #6 bought it.
I usually advise my client to make their highest and best, and I include a brief cover letter to the Agent supporting our offer. Agreed, all cash or mostly cash is best. Clean offer, As Is, without a lot of petty contingencies or requests other than Inspection period and Finance contingency.
I usually advise my client to make their highest and best, and I include a brief cover letter to the Agent supporting our offer. Agreed, all cash or mostly cash is best. Clean offer, As Is, without a lot of petty contingencies or requests other than Inspection period and Finance contingency.
Exactly.
It is a surprise to many buyers that the seller may accept an offer and never reply to them with negotiation or a counter proposal, etc.
When there is little or no inventory, a lot of stipulations or aggressively low price offer are quick ways to get the "Thanks for your interest. The sellers accepted another offer," email as the only reply.
People wonder if the buyers' agent is goosing them for maximum money, but after they lose out on a few houses, they usually learn that they will either settle for less, or pony up to the market demands.
It all depends on the type of property and how replaceable it is. Typically I tell them to offer the price at which they would pissed off if someone else bought it for instead of them.
Yesterday, I showed a home that was just listed and already had three offers (since it was a nice 3 bedroom 2 bath home recently updated in good condition for only $175,000) which would cash flow as a rental. I explained to the buyer that we know there is limited inventory so only one person is buying that home so the next one that is listed will probably have the remaining two bidders and them in another bidding war.
I also encourage them to be a back up offer since the seller can play stronger on inspection contingencies if they have another ready willing and able buyer in line to buy it.
I put this in a thread somewhere here. Son listed home 2 days ago, heavy traffic. 1st offer came in 10K above list, no financing contingency, home inspection contingency, but the offer had to be accepted before tomorrow's open house.
I put this in a thread somewhere here. Son listed home 2 days ago, heavy traffic. 1st offer came in 10K above list, no financing contingency, home inspection contingency, but the offer had to be accepted before tomorrow's open house.
I have done that for a buyer a couple of times. We will offer you xxx because we don't want a bidding war.
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