As inventory becomes tighter and the Southern New Hampshire Real Estate Market becomes hotter, more and more buyers are finding themselves competing with other buyers in multiple offer situations, popularly (or unpopularly, as the case may be) known as "bidding wars".
In several recent situations where my Southern New Hampshire Real Estate clients had numerous offers to choose from, I was surprised at some of the offers submitted.
Let me clarify here and say that, in each case, all offers were submitted by cooperating real estate agents on behalf of their buyer and all agents knew in advance that it was a multiple offer situation and they should present their client's highest and best offer by a certain date and time.
Here are five great ways to get booted out of the running in a multiple offer situation.
- NUMBER ONE: Offer $20,000 below asking price. (Surely in a multiple offer situation on a property that has only been on the market a few days no one would be offering anything close to asking price, right?)
- NUMBER TWO: Have your agent reassure the seller's agent that you are "well-qualified" but don't submit any actual proof. (No proof of funds, no finance letter...nothing. Bonus points if you can get your agent to stammer and mumble when asked about the lack of documentation.)
- NUMBER THREE: Have your agent reassure the seller's agent that you COULD put 20% down but write the contract for 0 down. (There's an old saying, "if it isn't in writing, it doesn't exist". Just because you COULD put 20% down, doesn't mean you WILL so the seller is going to evaluate your offer as written and look at you as a buyer who needs 100% financing.)
- NUMBER FOUR: Have your agent present a cash offer with you as the buyer and then provide proof of funds in someone else's name. (We're really happy that Aunt Sally has a butt load of money but Aunt Sally would not be contractually obligated, you would be. So either provide proof of funds in your own name or have Aunt Sally write the contract.)
- NUMBER FIVE: Make sure you clutter up your offer with a laundry list of personal items you want the seller to leave...refrigerator, washer, dryer, riding mower, snow blower, generator, couch, loveseat, tupperware, etc. (Bonus points if you also ask for things that the seller specifically excluded from the sale such as the playhouse that was hand made by the homeowner's deceased father.)
I swear, I am not making this stuff up!
The important take away from this post is that, with the exception of Number One, all of these buyers were knocked out of the running for reasons other than the price they offered.
So, if you are trying to buy Southern New Hampshire real estate (or real estate in any other area) and find yourself in a multiple offer situation, here are some tips:
- Number One: Have your financing ducks in a row so that you can provide valid proof of your ability to perform.
- Number Two: Be aware that the seller is going to take into account the type of financing you need because the seller is going to be concerned with which buyer has the strongest likelihood of actually making it to closing. Generally speaking, the more a buyer is putting down, the more likely it is they will be able to get their loan. So, if you can put 20% or more down, put that in the contract, it will give you a leg up on your competition.
- Number Three: If you are working with a family member to be able to pay cash for a property, work out the details in advance as to how you are going to present proof of funds, who is going to be on the contract, etc. A seller is going to be hesitant to blow off other offers to take a cash offer when there is a chance that the person who has the money (but is not a party to the contract) is not going to part with it in the end (I've seen it happen, believe me).
- Number Four: Keep your contract as clean as possible. Don't ask for things you don't absolutely need.
- Number Five: And, of course, don't lowball! If you are new to the market and don't yet have a sense of values in the area, have your agent perform a market analysis on the property so you can feel secure that it is worth the asking price.
If you want help succeeding in buying or selling Southern New Hampshire real estate, you can reach me at 603-490-5344.