What do I do if there are multiple offers on a home I want to buy? This is a common theme in today’s Denver and Boulder Colorado real estate market because inventory is low right now. There isn’t a guaranteed way to beat out the competition, but here are some tips that will give you the best chance for success.
1. Determine The Most You Are Willing To Pay: Work with your agent to get a report of similar homes that have sold and determine the “maximum” you are willing to pay.
2. Offer Your Maximum: If there are multiple offers and you are convinced this is the home for you, present your “maximum”, often called highest and best, and that way if you get outbid you don’t have any regrets
3. Don’t Believe Your Friend Who Says to Offer 10% below list price: While some people will tell you to always offer X % below asking price, this simply is not true when buying foreclosed home in Colorado. It is competitive. Most foreclosed homes in Colorado sell for 99% of list price. Some sell higher. Your agent can give you professional advice to make a strong offer but without paying too much.
4. Tighten Up Those Dates! – When you write an offer to buy a home in Colorado, we have a date table for all kinds of “outs” for the buyer, otherwise called contingencies. These include a deadline for inspections, appraisals, final loan approval, etc. If you back out of the contract for one of those reasons (on or before the deadline for that contingency), you get your earnest money (deposit) back. If you want to give yourself the best chance of beating out another offer, take out the contingencies you are willing to waive. The ones you need, make the dates as soon as they are feasible to accomplish. This includes closing.
5. If possible, close in the CURRENT MONTH – this is self explanatory, but sellers (if all other factors in the offers are the equal) will often choose the offer that can close soonest.
6. Show Them The Money! – If you can pay cash, do it! Next in order of preference is a conventional loan with a strong down payment. Last on the pecking order is an FHA loan because it has more hoops the buyer/seller/property need to jump through and increases the likelihood of it falling through. When given the choice, sellers prefer cash buyers and then conventional buyers.
7. Increase the Earnest Money – having a higher earnest money and/or a portion of it explicitly non refundable can help!
8. Take Out Concessions – It’s pretty common to ask the seller to pay a buyer’s closing costs, but in a multiple offer situation, take them OUT if you can afford to. It shows sellers you don’t “need” concessions and are therefore a stronger buyer. The seller ultimately wants the highest offer price that has the lowest likelihood of falling through.