This BLOG On Multiple Competing Home Offers By Buyers In A Sellers Market Was PUBLISHED On March 30th, 2019
Multiple Competing Home Offers situations are becoming more and more popular due to rising home prices.
- Home prices have gone up throughout the United States
- Many parts of the country, home values have increased double digits years after year since 2013
- In 2018, mortgage rates hit the highest since the 2008 Great Recession
- The FED increased rates twice last year
- Despite the Federal Reserve Board increasing interest rates twice last year and mortgage rates hitting the highest levels since the housing bubble crash, home demand remained very strong with no sign of a correction
- The FHFA, Federal Housing Finance Agency, increased conventional loan limits to $484,350 for 2019
- This was the third such increased by FHFA due to rising home prices for three years in a row
- HUD, the parent of FHA, increased FHA Loan Limits for three years in a row as well
- 2019 FHA Loan Limits is set at $314,827
In this blog, we will discuss on how to tackle Multiple Competing Home Offers and get the winning bid.
Winning Multiple Competing Home Offers In Sellers Housing Markets
Many home buyers get discouraged when putting in a bid on a Multiple Competing Home Offers situation.
- They often wonder whether or not it is worth it
- It is not for home sellers to get over a dozen of Multiple Competing Home Offers in a seller’s market
- Seller’s market markets is when there are more buyers than inventory of homes
- Home buyers should always put their offers in when there is Multiple Competing Home Offers
- The highest bid is not always the winning offer on Multiple Competing Home Offers
- Someone will get the winning offer and why can’t it be you?
There are many tricks of the trade in getting the winning bid on a Multiple Competing Home Offers situation. And it does not need to be the highest price. We will cover strategies in helping you the winning bid when you encounter multiple home offers in the following paragraphs.
Earnest Money Shows Buyers Have Skin In The Game
Earnest money is very important.
- Earnest money shows that the buyers are serious
- Larger earnest money deposits show sellers that buyers have skin in the game
- To show that you are really serious, offering large earnest money with no contingencies may get you the winning bid
This means if the deal does not close, the sellers get to keep the earnest money.
Show The Strength Of Pre-Approval
There are instances where home buyer’s mortgage loans get denied because loan officers did not properly qualify home buyers.
- This is every sellers nightmare. Sellers prefer cash buyers
- Unfortunately, most home buyers need to obtain a mortgage
- Show the sellers that you have a solid pre-approval
- A TBD Underwriting Approval stands out and shows strength
- TBD Pre-Approvals are loan commitments where borrowers already went through processing and underwriting
The only condition left is underwriting the property and obtaining a home appraisal.
Offering Incentives To Sellers
Offer the sellers that you can delay obtaining possession of the property after closing.
- This means that sellers have time to move out of the home after closing
- Buyers may not have immediate occupancy but it may be a great way of getting the winning bid on a multiple completing offers situation
- Home buyers have 10 days home inspection contingencies
- Buyers also have mortgage contingency timelines
- If you are dead set about the house and have a solid pre-approval by a reputable lender, you may want to waive the home inspection and/or mortgage contingencies
- Offer to pay for the bridge between the appraisal and purchase price if the home does not appraise out
- You may want to offer the best price you are willing to pay, even if it means above the sales price
Remember that price is not the only factor in getting the winning bid on a home with multiple offers. There is no set formula in getting a winning bid. It is up to negotiations between buyers and sellers. Hiring an experienced real estate agent who have years of experience is very important. The real estate agent will be the key negotiator with the listing agent.