Here are my tips to buyers and sellers about multiple-offer scenarios.
In our current crazy market, inventory is low and buyers can often get caught up in multiple-offer situations. In today’s message, I’ll show you what makes a strong offer strong so that buyers know how to craft a competitive offer and sellers know what to look for.
The world’s best offer would be at the highest price, would be paid all in cash with a nonrefundable deposit, would have no inspection conditions, and would have a flexible closing date. Today let’s break down each of these elements.
As a buyer in today’s market, you have to have your finances in order, and you have to submit an offer with a pre-approval from a lender. A real pre-approval from a mortgage broker or lender will take into consideration your current employment, employment history, salary, credit, and of course, your down payment. Only offers with a pre-approval are being taken seriously in this market.
One of the ways you can make your offer even stronger is by removing the condition to get financing. Now, that doesn’t mean you won’t get financing on the home; it just means that the offer isn’t conditional on the financing. One way to do this is by increasing your down payment, as the higher your down payment is, the less likely you’ll be denied your loan. Buying with cash also makes an offer look much stronger.
Sellers should look for the offer with the highest down payment and the fewest conditions. One of the most important conditions is the home inspection. As a real estate broker, when representing a buyer, I am duty-bound to recommend a home inspection, but if the buyer knowingly chooses to buy the house without a home inspection, that’s their choice. I recommend that sellers have a pre-listing inspection down that is available to all buyers; that way, they can generate a bidding war without the conditions.
Another element for buyers to add to their offers is a nonrefundable deposit. In Quebec, the law states that all deposits are refundable unless otherwise mentioned. To make your offer stronger, offer a deposit that becomes nonrefundable after the inspection contingency is waived.
In terms of closing dates, many think that because the market is currently so aggressive that a quick closing is the most attractive option for sellers. That’s not always the case, however. Think about it this way: the sellers have to live somewhere, so they’ll often need time to go find a new property. Some sellers are requesting between two and six months for a leaseback period in which they can still live in the home they’ve sold in order to find the next one. I recommend that buyers be as flexible as possible for closing dates. Sellers should make sure their listings reflect their ideal closing time.
Another element of a strong offer could be presenting an all-cash offer, which would eliminate any need for financing. Bear in mind that just because you’re submitting an all-cash offer, that doesn’t mean you can lowball and still get the property. The market is so hot right now that cash offers aren’t going to get the discount they once could.
Finally, I recommend that buyers write some kind of personal letter or make a video to send to the seller. People typically sell to those who will most appreciate the property, so be sure to include why you’re so looking forward to owning that home.
If you have any other questions about crafting offers or what to look for in an offer, please don’t hesitate to reach out to me. I’d love to help you.