Here’s how to make your offer stand out in a multiple-offer situation.
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If you find yourself in a multiple-offer situation as a buyer, here are three tactics you can use to strengthen your offer:
1. Shorten your contingency time frames. When you write your offer, you’ll have three contingencies: the home inspection, appraisal, and loan contingencies. The standard contingency time frame for the physical inspection, for instance, is 17 days, so we recommend shortening this to 10 days (usually the minimum number of days buyers ask for). The standard appraisal contingency time frame is 17 days, so you can shorten this to 14 days—the limit that lenders recommend because they need time to get everything ordered and make their report. The standard loan contingency time frame, meanwhile, is 21 days, so reducing this to 17 days makes a world of difference. It’s always best to ask your lender if they feel they can get you a conditional loan approval within this time frame.
Put your best foot forward right away.
2. Offer your highest price in your initial offer. Many buyers hesitate to do this because they want to leave room to negotiate, but in a competitive market, sellers don’t always counter all offers. Put your best foot forward right away. This way, even if you don’t get countered, you at least know you offered the most you’re willing to pay. If you do get countered and have already offered your highest price, you can counter back with shortened contingency time frames or an added sum of a couple thousand dollars.
3. Waive the appraisal contingency altogether. Here you’re stating that even if the property appraises below the price you offer, you're still willing to pay that price. For example, let’s say you offer $950,000 on a house, the appraisal comes in at $900,000, but you decide you don’t want to pay that much over the appraised value. You still have your loan contingency in place, which allows you to cancel because you technically can’t get your loan for 20% down (or however much you plan on putting down) if the house doesn’t appraise for $950,000. This caveat allows you to back out of the offer if you decide that the appraised value is too low. If you decide you still want to buy the home for $950,000, you would then have to bring the additional $50,000 over your down payment and closing costs (based on the $900,000 loan).
If you have questions about this or any real estate topic, don’t hesitate to reach out to us. We’d love to help you.