Today’s Home Buyer Tip: Succeeding in competitive offer situations
Northern Colorado is currently experiencing a shortage of homes, whether you’re searching for Windsor homes for sale or homes in other nearby cities. If you fall in love with a home that has multiple, competing offers, what is your strategy? Is it simply to pay the most money? Is it writing a nice letter to the owner? These things help but they are not enough.
Many agents rely on escalation clauses to ensure you pay more than your competitors, but it’s not all about the money. The right strategies can set your offer apart for reasons other than the price. A well written offer can result in first-time homebuyers with a low down payment prevailing against cash buyers offering thousands more. How is this possible? In a recent transaction we found ourselves competing with 8 offers, 2 of them were cash. Our clients had an 8% down payment. They loved the home, it was priced at $319,000, it was move in ready and they loved the yard. We knew the odds were stacked against us so we pulled out all the stops.
- We offered a free professional home cleaning to the seller to relieve them of the burden of cleaning the home when they moved out. ($250)
- We agreed to pay the seller’s title insurance policy. ($1,200)
- We offered to let the seller stay in the home for free for 1 month after closing. (1 month’s mortgage payment)
- We got approved for well over the purchase price to show financial strength. (free)
- We wrote a heartfelt letter and provided a picture of the family. (free)
- We provided a dumpster to assist the seller with getting rid of junk as they moved out ($150)
This might sound a bit crazy, but the total cost of our additional incentives was about $3,000. We found out later that the seller had competing offers that were $6,000 higher than ours. So, in our estimation, we came out ahead, and got the house! When we asked the listing agent why the seller chose to leave money on the table to work with us she said, “it just seemed like they wanted it more than anyone else.”
Regardless of where you’re looking in Northern Colorado. There’s a chance you’ll find yourself in a competitive situation, especially in price ranges under $400,000. Some people think that competing offers on a home means a bidding war-auction style situation but that is almost never what happens. The vast majority of the time the seller will simply ask all interested parties to submit their highest and best offer by a certain date. Once that date arrives, all offers are reviewed, and one is chosen.
Not every home is competitive but if you fall in love with one that is, we’ll help you decide if you want to throw your hat in the ring, or move along to the next one.