After months of searching, you’ve finally found the house of your dreams. The problem is, other people are dreaming of the same house — and they’re making offers to compete directly with yours.
You’ve heard us say it’s a seller’s market, and multiple offer scenarios are more common than ever before. Ruckart Real Estate’s Lead Buyer’s Agent Craig Waterworth notes that he’s seeing these competitive situations happening across the market — which is highly unusual.
“Historically, we only received multiple offers on ‘hot listings’ — a house that’s usually in a very good, desirable, and established location that’s also in great shape with an affordable price tag,” Craig says. “Right now, we are seeing multiple offers across every price point, in the counties, in rural areas, in suburban areas, and urban areas. Listings being sold ‘as is’ to an investor to flip or hold as a rental also attract multiple offers.”
In short, the competition is fierce for homebuyers in Richmond right now, but it is possible to make your offer stand out from the rest. You’ll need patience, perseverance, and a knowledgeable buyer’s agent to win in a multiple offer scenario, but the effort will be well worth it when you find yourself claiming the keys to your dream home. Here are a few of our key strategies for standing out to sellers who are considering multiple offers.
- Know what sellers are looking for. True, sellers want to make as much money as possible on the sale of their homes, but going big on price isn’t the only way to win in a multiple offer scenario. “Sometimes other terms can mean just as much,” Craig says. “A particular close date is a good example, or the lack thereof. Meaning, giving the seller the flexibility of determining a close date once they’ve found their next residence.” Some other things to consider:
- Closing costs — Sellers love a “clean offer” that doesn’t include requests for closing costs assistance.
- Loan type — Of course, Sellers love cash offers, but a conventional loan with 20% down comes in at a close second. FHA and VHDA loans are considered less competitive due to loan specific conditions on condition and appraisals. A bad appraisal can stick with a property for up to 6 months in some cases.
- Inspection flexibility — Your agent can write a clause that says you are willing to absorb the first $2,000 in material defects found at the time of the inspection. This shows the seller you are willing to waive the smaller items, but still gives you the ability to ask that bigger, more serious defects be addressed. Keep in mind that the only defects that can be negotiated are structural issues, defects that can negatively impact the health of the home’s inhabitants, issues regarding the safety of the home’s inhabitants, and finally antiquated systems not operating as intended. All other defects are considered cosmetic and excluded from consideration in a home inspection negotiation.
- Appraisal cash difference — With prices rising quickly, we are seeing appraisals come in slightly lower than the agreed-upon purchase price. Sellers are asking people willing to offer “above asking price” to cover the difference in cash should there be a shortfall between the contract price and the appraised value. A proof of cash funds may be requested by the listing agent, so it’s best to have that ready. (Cash gifts from a blood relative can also be considered if you have that luxury.) Showing financial strength with a proof of funds and being willing to cover an appraisal shortfall can make a BIG difference to a seller if you’re willing to take that risk.
- Assemble your dream team. This isn’t the time to go it alone — you need a strong team willing to put in the work to help you win. Start with an experienced agent, like our own Josh Lee, who knows a thing or two about helping buyers get their offers accepted. “We make sure we are communicative to the listing agent, ask questions about how we can help stand out, and then when we do finally submit we make sure to let them know about our buyers, and ensure the buyer’s offer is presented professionally,” Josh says. “You only have one chance to make a first impression, and when our offer is presented to the sellers we want to be sure it looks perfect.” Your agent can also help you get in contact with the other key players who will help you succeed, including trustworthy home inspectors and lenders.
- Focus on what you can afford and what you want. “Don’t get caught up in paying over, if it doesn’t make you feel comfortable,” Craig says. “It’s OK to walk away.” That said, it’s important not to get hung up on the listing price, and how much you’re going over it. “That’s the wrong way to think about,” Josh advises. “Sometimes the list price is low on purpose, so you shouldn’t be saying, ‘Oh man, I’m paying 50k over list price.’ You should be saying that you are paying over, because that’s the market price for the home.” Keep in mind that, because we’re seeing above average appreciation across our market here in Richmond, if you can buy now, you’ll be getting a discount compared to those who buy later. The rates are low and the interest saved over the life of your loan will make up for any money you had to give up in order to buy that perfect house.
- Don’t be afraid to show your humanity. Selling a home can be just as emotional as buying one. That’s why Josh will often include a photo of buyers with their offer, and why Craig believes in the power of the “love letter.” “I’ve seen it make a difference too many times,” he says. “In this market, you have to do everything you can to set yourself apart from the others. There are humans involved, and if you can find some heartstrings to pull, it matters.”
- Keep your chin up. This is hard work! But your agent’s job is helping you through it, and a positive attitude will go a long way. “Try your best, and if it doesn’t work out, it wasn’t meant to be,” Josh says. “That sounds cliche to say, but I’m telling you, all the houses clients I know have lost out on, feel so much better about the one they actually won. It can be tough to put your heart into an offer and lose, but I promise the right one is around the corner.”