How do you compete in Vancouver’s Multiple Offer Market when buying a property. Over the past six months we have seen a number of multiple offers, particularly for highly desirable properties in good locations. Inventory is still very low and good properties at fair market value will typically bring multiple offers. You could be competing against 4-5 other buyers, and the situation can be stressful.
In general, the highest bid is likely to win, but not always. The reality is that when there are multiple offers, it is common that a few of them are very similar on offer price.
The best method of standing out in a multiple offer situation is by presenting yourself as the buyer the seller would like to do business with. Your real estate agent will present you and your offer in the best fashion possible to make you the buyer of choice.
Here are some ways that multiple offer situations are won.
Confidence in buyers’ ability to close
A really high offer is no good if the seller is worried about the buyer’s ability to actually close the deal. Apart from your offer price, a seller and their agent will look at factors like the size of your down payment, size of your deposit, closing date and motivations for moving. A buyer with a large down payment and a quick close that is clearly not dependent on the sale of another property will usually win, even if there is a bit more money on another offer.
Is your Realtor easy to work with?
Everyone wants a real estate agent who is working diligently for their buyer, working relentlessly for your best interests. In a bidding war, the line between persistence and bullying is a thin one, and you want an agent who is a “professional” and is easy to work with. The winning agent is typically a strong communicator who is persistent and attentive to detail. Listen to the seller’s needs and craft an offer that meets those needs.
Have Inspections done ahead of offer
Get your inspections done ahead of time. If a home sale is going to fail, it is probably because of the inspection results. An offer that has pre-inspected the home and waived the inspection contingency has a better chance of success because it’s removed a huge uncertainty. This is a costly strategy, as you need to spend at least $400-$500 on an inspection for a home you may not get, but it can pay off if the house is right.
Write a letter of Introduction
Sellers often have huge emotional ties to a home, especially if they have been there for a long time and raised a family there. Put a face behind your offer with photos and a personal letter telling why you love the house. You never know what little personal detail can make them feel better about you as a buyer.
Being the Buyer of Choice
Skip the escalation clause and just make your highest and best offer; buyers sometimes use escalation clauses, it allows you to raise your bid in increments to beat the next best offer, without having to potentially overpay. However, stacked against a straight-up offer for a similar price, the offer with an escalation clause almost always loses. If you have one offer for $500 k against another offer that starts at $490 k and escalates to $500 k, the net result to the seller is the same. Sellers almost always pick the offer without the escalation because that buyer shows they “want it more.”
Other Tips on How to Compete in Vancouver’s Multiple Offer Market
1) Submit your offer with a current pre-approval letter, including the mortgage brokers contact information.
2) Place a deposit with the agent’s brokerage before to submitting the offer; proof of the deposit should be presented with the offer.
3) “As-is” with right to inspect offers will usually get more attention from the seller.
4) Submit proof of funds to close with your offer. Cash and financed offers require funds for closing – remove all doubt about your offer.
Don’t get wrapped up in the competition and set your own limits on what you are willing to pay for a home. There will always be other homes to buy. At the same time, focus on the big picture. If the home is right for you and your needs, step up and take the extra steps to try to get it. An experienced agent who has been in these competitive situations is an invaluable resource to coach you through the process and maximize your chance of success.