Did you just find the home of your dreams only to be made aware there are 4 other buyers you are competing with? Your first reaction is, I’m not getting into a bidding war! Can you even trust what they are saying is true?
The Dilemma: All great properties that are priced well are likely to have multiple offers, so what is the solution?
1. Work With an Agent Respected and Seasoned in That Market Place
By working with a respected agent you will have an advantage in putting your whole package together. Often times it’s not the highest number that ultimately wins the deal but rather, how you assemble the details. When representing a buyer, I will ask the listing agent what 3 things are most important to the seller and in what order. Price may be the third most important contingency compared to a later closing date but you won’t know unless you ask. Listing agents know when I assemble a package, we will not change the deal in the midst of the transaction. During multiple offer situations, as a listing agent, we often consider taking the bid that is slightly below the highest after we have reviewed the behavioral patterns of the situation. For example- a few weeks ago we offered a great property for $675,000, many families expressed interest. Family #1 comes in strong at $676,000. Family #2 comes in at $620,000 Family #3 comes in at $650,000 (we can observe here that family #1 loves the home and values the property for the list price). We asked all candidates to come up with their final and best offer by Friday end of the business day. Buyer #1 holds at $676,000 #2 goes to $675,000 and #3 drops out (at that moment). We select Buyer#1 because their initial offer made a subtle statement to the seller. Over the next few days, #2 and #3 came back with $700,000 and $705,000, the seller, very stressed and frustrated couldn’t help but wonder why they did not honor the request of “final and best” when they had the opportunity, it left uncertainty and question about trust and truth. The question: were they strategizing a momentary win and then consider requesting a credit later in the transaction? What to do? In all fairness to Buyer #1 who was honest and thoughtful from the beginning, we decided it was fair to offer them another opportunity to strengthen their offer. They were at the top of their budget but were able to scrape together another $10,000 with a lovely note to the seller reinforcing the idea that they really wanted the home. The seller decided to stick with Buyer #1 and the transaction has been a wonderful experience thus far. The best way to get feedback on your agent's position or strength in the industry, simply to attend open houses and share with the host which agent you are working with. Based on the reaction you will know. Check Zillow for references and ask for testimonials.
2. Have Your Ducks in Order in Advance
Have a solid pre-qualification letter ready. Determine in advance who you will be working with as far as a reputable lender. It is important for you, to share with your agent, what financial situation you will be working around. For example, if you are using the equity in your current home to purchase the next that strategy should be planned out. You should be ready to list your current residence at the drop of a dime. I was working with a past client, they wanted to move from Hoboken NJ to Glen Rock NJ. I enlisted the help of colleagues in our Hoboken office Dean and Gerard. They prepared by staging, taking pictures, and getting all the paperwork ready so we could pull the trigger at a moment's notice. Upon my clients identifying their dream home, I called Dean and Gerard who immediately went into action, by the time the Seller in Glen Rock needed to make a decision we contracted their Hoboken unit thereby giving the Seller of Glen Rock comfort in the contingency clause.
3. No Emotion, This Is Business Be Smart
Be level-headed, at the end of the day, although you may love the home, it’s STILL A BUSINESS DECISION. Refrain from getting sucked into the concept of a win. Do your homework together with your agent, review comps, consider how long you plan to stay, come up with your final and best. If your best isn’t good enough, so be it. There will be another home. It will be ok.