When writing contracts, different scenarios call for different plays. Knowing which play to run in each scenario will increase your chance of winning. This week we’re breaking down some of the strategies we use to help our buyer’s win in multiple offer situations which we conversely use to negotiate for our sellers.
To understand which play to run, we first need to understand the scenarios our clients are up against. To oversimplify, let’s break this down into three situations.
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A home that’s been on the market for more than three weekends, has no offers and has potentially dropped the price, indicating high motivation.
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A home that has been on the market for two to three weekends but still has no compelling offers.
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A home that has multiple offers within 2-3 days.
We will focus our conversation on scenario #3 because this is the most challenging to win and if you can win here… you can win the other two.
To win in these hot offer situations, a great buyer’s agent has two objectives. 1. Win and 2. protect the client’s earnest money (which scales up with purchase price and is often well into six figures).
Next, is understanding the elements of an offer. Every offer has it’s core parts:
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Price
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Dates & deadlines (of which there are 40 on the Colorado contract)
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Down payment
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Earnest money
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A great lending team (if not paying cash)
In addition, there are (clauses) that can be added into a contract in hot situations to make the offer stand out beyond what was just mentioned including:
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Increasing the earnest money amount beyond what the seller has requested
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Shortening the timeline for earnest money to become non-refundable
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Allowing some or all of the earnest money to become non-refundable upon signing
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Waiving specific contingencies (appraisal, loan, due diligence, lead-based paint…)
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Including a rent-back agreement beyond closing
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Including an escalation clause to beat any higher offer
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Including appraisal gap coverage
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Placing limitations on the items allowed to be included in the inspection objection
Any combination of these tools can be used to make an offer stand out among others. The trick is gaining an understanding from the listing agent where other offers stand or better yet, where they may be falling short and capitalizing on those details. This, I should mention should be done over the phone because a text just doesn’t allow an agent to demonstrate expertise or build rapport the same way.
One additional and often overlooked element of an offer is the way in which a great buyer’s agent and lender, if applicable, are able to communicate and package the offer to the seller and listing agent. When we present an offer, we want the listing agent and the seller to feel overwhelmingly confident that our client LOVES the house and if we are selected, we’ll make the process seamless from start to finish because we are professionals and our client is well prepared.
I cannot emphasize the importance of this piece enough. There is nothing sweeter than hearing that you have just won a bidding war without submitting the highest offer, and through clear, professional, respectful communication we made the listing agent and the seller feel comfortable choosing us without needing to counter the cleanly written offer.
Have a great weekend and call us if you want to talk real estate!
