How to Compete Against Multiple Offers as a First-Time Buyer

You’ve found the home you want, but what happens when other buyers feel the same way? Are you ready to compete with multiple offers? Do you even know how?  Whether it’s only one other buyer or more, you need to have a strategy so you stay in the competition and come out as the new homeowner.You’ve found the home you want, but what happens when other buyers feel the same way? Are you ready to compete with multiple offers? Do you even know how?It can be frustrating if you keep losing out on homes you love. Many new buyers can experience this exasperating outcome, especially in certain hot neighborhoods flooded with buyers and lower inventory.Whether it’s only one other buyer or more, you need to have a strategy so you stay in the competition and come out as the new homeowner.Here are some tips to make your offer the one the sellers will choose:Evaluate Your Terms and Max Budget First and foremost, really evaluate what you are willing to do to get a home and where you may be flexible on your budget – including offer price, closing costs, and other fees – and other terms – including contingencies such as time frame for closing or moving.Most importantly, stick to your max budget limit and don’t be swayed to go over. Accept the fact that you may need to move on to another home if a bidding war gets too high for you.Be Prepared and ReadyWhile you evaluate your situation, work with your agent to come up with a “multiple offers” plan. That way you’ll be prepared and be able to react swiftly when the time comes. When you’re in the thick of it, you want to make confident decisions quickly and not be waffling. You don’t want to lose a home you can afford since you weren’t prepared!Negotiate with the Seller (not the Buyers)It’s tempting to worry about what the other offers are like, but don’t get too distracted and anxious over them. It’s impossible to know all about the different buyers and what their situation and budget actually are – such as their financing terms, time frame, and contingency requirements.Instead, focus on working with the seller and knowing how best to approach them, regardless of the other buyers. Have your agent find out more about the seller and any objectives they may have about the transaction process and final outcome.That way you can tailor your offer to better match their wants and needs. For example, do they want to close quickly or do they want to rent back for a bit?Be Brave and BoldIf you really want a certain home, then make the absolute best offer YOU can from the get-go. It’s the time to be bold and get noticed — but remember to still stay within your max budget!Keep in mind that your initial offer may be the one and only chance you have to stand out and stay in the negotiation process, especially when there are several interested buyers. It’s not the time to be overly cautious or restrained in an offer.Never start with your lowest price offer when you face other multiple offers. Start with your max or as close to it as possible if you really want that home. A seller will review all of the offers and eliminate those they deem are not worth the time to move forward with.Remember Price Isn’t EverythingYou don’t have to have the highest offer price to be the “winning” offer (but remember you don’t want to be the lowest either). You want your entire offer “package” to shine, regardless of price. If you really love this home and want it then be prepared to alter your package to attract the sellers.

• Be direct and forthright about how you present your finances and other terms in your offer. You don’t want to be a mystery to the seller.
• To stand out in the crowd of offers visit the home as much as you can. You want both the buyer and the listing agent know you mean business.
• Keep the contingencies to a minimum and be willing to follow the seller’s time frame for closing and moving out.
• Pre-schedule the inspection if possible soon after making the offer to keep the process moving at a good pace. Even though it’s appealing to waive an inspection, we don’t recommend buyers doing that since you want to be careful.
• If an inspection report comes back with any issues, deal with the big ones that are safety concerns rather than small nonsignificant issues. Remember, sellers can easily move on to another willing buyer.
• A large earnest deposit and a large down payment shows a seller you have strong enough finances to buy the home and are a likely candidate who can make it to closing.
• Work with your agent and lender to ascertain the best mortgage options for dealing with multiple offers. Sellers will look at buyers with less obstacles and more straightforward financing. For example, some mortgage options tend to be easier to process, such as conventional loans. FHA loans and others usually have more guidelines to follow, increasing the time it takes to get to closing.

Be Likeable and FlexibleSelling a home is very personal and emotional for many sellers. Even though it’s technically a business transaction, many buyers want to like the buyers of their home. They don’t want to leave their former neighbors with “horrible” homeowners and feel acrimony when it’s all complete.

• Write a letter to the sellers and include photos of you and your family describing why you love this home and how well you will take care of it. Plus, it will demonstrate your level of interest in the home and your determination to stay in the negotiation process.
• Be patient and understanding about the sellers. It’s a big decision and big deal for them no matter if they are moving across the country for a job or moving down the road to a bigger home for their growing family. You may not know the full reason they are selling and respect their own uncertainty at times.

As you can see, having a plan and being prepared is an essential first step when dealing with multiple offers. Many buyers learn the hard way after they lose out on a home. I can help you from the start with your own strategic plan!