Phipps Brittain are local real estate agents and investors with significant experience in the KW real estate market. The last five years have been a crazy market for buyers. The only thing that stays constant in this market, is change. With low inventory and high competition, losing to a multiple offers situation is typical for buyers in the KW real estate market. However, we know how to win in a multiple offer situation through studying trends, developing an in-depth strategy and loads of practice.
You can keep reading below or watch our video on How To Win In A Multiple Offer Situation.
Understanding a multiple offer situation
If you’re hoping to purchase a property and want to learn about the tips and strategies we use for our buyers, you need to understand the competition in our current market. Buyers are currently bidding in a seller’s market. Meaning low inventory and high demand.
Let’s walk through a typical scenario for buyers today.
You, the buyer, find a great home and want to make an offer. The seller says, “Great! Well, we’re taking offers on this specific date and time. Send us your best offer, and we’ll let you know”. It’s prevalent in our market right now for a property to list on a specific day and then take offers in a week, creating a multiple offer situation.
There are really only two pieces of information that you will get as a buyer:
- How many offers there are and
- Which brokerages are representing the offer
Unfortunately, the competing offers are not typically available on their price or terms and conditions. So you have no idea what you’re up against and how competitive you truly need to be.
Ways to win in a multiple offer situation
The best way to ensure that you win in a multiple offer situation is to understand the exact terms and conditions the seller is looking for. Offer more money than the other buyers and call it a day.
In this situation, money talks, literally.
If you want to win in a multiple offer situation, the easiest way is to just straight-up offer exactly what the sellers want. Typically what they “want” is for you to offer more money than all the other buyers.
But is it the best way to win a multiple offer situation?
Suppose you want to ensure you’re getting a fair or reasonable value for your property purchase. In that case, you’ll need to take different steps to be competitive but not overshoot the property’s worth by a ridiculous amount.
Preparing for a multiple offer situation
You find the dream home and schedule a time to visit the property. You’ve confirmed with your real estate agent the dates and times the sellers accept offers. Based on the listing, you know you’re likely to bring an offer to the table. Our advice to you: understand the property in detail.
What we mean by this is, understand what other properties are available in that same neighbourhood that compares to others that have sold.
When reviewing these properties, you can ask yourself questions like:
Are the characteristics of the property similar?
- Is it nicer?
- A better location?
- Are the expectations in line with other properties that have recently sold in the last 30 days?
Getting answers to these questions will help provide context on where this property fits in the market. It will help you understand the seller’s expectations for this type of property. Next, you can ask your real estate agent to communicate with the listing agent and ask questions about what the sellers want in an ideal buyer. These questions may include their preferred closing date, what inclusions and exclusions will be a part of the deal, and if there is anything else aside from the price that will be valuable to the seller.
To keep it simple, you don’t get what you don’t ask for.
Any piece of information given by the listing agent will help you prepare a firm offer. Getting this information early on can better position your offer and demonstrate that you’ll be easy to work with. In addition, you understand what’s important to them and know what terms and conditions are likely to be accepted. Increasing the likelihood of your offer being seriously considered.
Understanding clauses and conditions
A clause will inherently be a part of the deal and agreed upon by the buyer and a seller. A condition needs to be satisfied by a specific time frame for the deal to proceed. For example, a condition could be getting mortgage financing for the property five business days after the offer is accepted. In a multiple offer situation, the standard clauses we propose keep the seller honest but are common in real estate transactions.
- Several walk-throughs
- Agreeing to pay the deposit and the remainder of the purchase price upon closing
The seller’s going to want to make sure they’re getting their money, and in this market, the fewer conditions, the better. However, you want to protect against hidden defects or mishaps before closing. Clauses will help ease your mind of things that go sideways and make it easier for the seller to accept them as they aren’t conditional; instead, they are agreements before closing day.
It’s common in today’s market to bring an offer forward with no conditions. Think of it from the seller’s perspective. They’ll have five offers on the table, and two or three are identical. What sets an offer apart is an offer with little to no conditions. As a seller, you are more likely to accept an offer without conditions as you’ll get the same money for half the work and liability.
It is a done deal if you accept an offer as a seller with no conditions. For buyers, this often means that there’s no inspection, no mortgage financing or insurance to satisfy, which can be daunting. However, there are ways around this. Not having conditions in your offer makes it stronger and more appealing to accept. So as a buyer, we recommend our, Buying Smart Package. The package includes a strategy to have no conditions but still be protected by significant liabilities
How to be a smart and competitive buyer
Our buyers make safe and competitive offers by making arrangements to take care of conditions before bringing an offer.
Preparation: As mentioned earlier, prepare by doing your market research and seeing properties with your ideal budget and amenities as early as possible. Build a relationship with your realtor to see the types of properties you want quickly. If it’s listed on a Wednesday, make an appointment by Thursday evening. For example, subscribing to MLS listings on a realtor’s website will help you stay informed. Be on top of viewings and research to figure out quickly if you want to make an offer.
Finance: Confirm your mortgage financing before you go shopping for homes. Know your budget by working with a mortgage broker who can help guide you in the offer stage. They don’t get paid until the offer has closed, so they won’t lead you to get your mortgage rejected. In preparation of offer day, we as your realtors are going to provide all the information that your mortgage broker needs to help accurately estimate your pre-approval budget. Getting your finances taken care of before you even offer on the home gives you much more confidence and clarity in what you can comfortably offer. If you get an accepted offer, you don’t have to worry about the financing as it’s already taken care of.
Inspection: Inspections are the second most common conditions that we see but are not very common to be accepted. Well, if you follow our instructions and you viewed the property early and determined you like it, you will have enough time between your viewing and offer day to request an inspection before offer day to the seller’s agent.
That’s right! You can ask the seller’s agent and the seller if they will grant you the property to inspect the home before bringing an offer. You’ll get a first hand look at the property to determine if it’s worth offering on or not.
Furthermore, you’ll get more information about the home to give you more clarity on if you should be bringing a stronger offer or if there are things that you should consider or renegotiate in your offer before you even end up presenting it. What you’re doing here is getting more information about the property. The more you can do before offer day, the fewer conditions you bring forward. You’ll also get peace of mind that you aren’t overpaying as you can negotiate based on what’s found in the inspection.
Pro tip: We like to use a cheeky little trick with our buyers when we’re in a multiple offer situation to offer a larger deposit. As a buyer, you have to provide a deposit to a seller. This ranges between $10,000-$50,000. If you have extra cash available to provide a larger deposit, your offer seems a lot stronger. It builds the seller’s confidence in you.
Bully offers: Any edge to make you and your offer more appealing in a multiple offer situation is to weed out the competition with a bully offer. A “bully offer” or a “pre-emptive offer” sends a firm offer to the seller’s agent before the listed offer day. When we say “firm” offer, that means no conditions and going over-asking. It’s called a bully offer because it needs to create FOMO (a.k.a fear of missing out). The offer needs to be good enough for the seller to accept but not so good that it’s worth more than what other people would bring forward on offer day.
It’s a tricky balance, but you’re in good hands if you’re working with an experienced realtor like ourselves. We utilize bully offers very regularly for our own purchases and our clients. It’s an excellent way to avoid competing with other buyers and you’re less likely to overpay due to a bidding war.
Being prepared and confident are the best ways to win in a multiple offer situation. Do your research, get in early, ask lots of questions, ease your concerns before writing conditions, and offer a firm offer. The best advice we can leave you with is don’t get stuck overpaying by letting others beat you with these tactics. Be competitive, but know your limits when you want to walk away. No one likes overpaying, and we put these tactics in place, so you’re not put in that position.
If you want more information on buyers’ tactics, Download our Buyer Guide. If you like what you read and are looking to purchase property in the KW region, contact us, we’d be happy to help you.