🤼What Happens When You Get Multiple Offers on Your House?
In the real estate market today, homes that are priced well and in the best condition often get multiple offers. Often in the first few days they’re for sale. It’s a seller’s market in Frederick Maryland. How can a seller best negotiate with multiple offers on their home? How can a buyer negotiate to win when there are multiple offers? Here are 15 tips:
The real estate market transitions from a buyer’s market to a seller’s market often over the years, depending on local economic trends. In Frederick, we’ve transitioned to a seller’s market over the last few years. The lack of inventory and the healthy demand has created an environment where we’re seeing a good number of multiple offers in the Frederick real estate market. Homes that are in great condition and that are well-priced for the market are in demand. In certain price ranges, those high demand homes are getting multiple offers. Here are some tips to negotiate when you have multiple offers on a house:
🏡Local Frederick Market Conditions
While first time home buyers are entering the market, and the first tier of move-up buyers are seeking homes, homes in these price ranges are in high demand. Buyers should expect the possibility of facing a multiple offer scenario. There is a portion of the market that is seeing a longer time on market for the lack of demand: the price ranges above $600,000. In certain neighborhoods in the smaller, outlying cities in Frederick County, the market is also slower.
But I need to mention a caveat…some neighborhoods are experiencing a different trend. Urbana real estate is selling in the higher price ranges than the rest of the county. Understanding your local market is important to establish correct expectations, which will make a huge impact on your negotiating strategy.
When we talk about real estate markets, buyers and sellers need to be aware that there is no such thing as a “National Real Estate Market.” Although much of the news talks about national trends, those statistics don’t reflect what is going on in your own local area. All real estate is local.
🙋Tips for Buyers in a Multiple Offer Scenario
A few years ago, if a buyer missed out on a home, they could just wait for another comparable home to come on the market soon afterward. In today’s market, they can’t count on that happening. With the lack of inventory, if a buyer misses out, they can’t be so sure a similar home will appear any time soon.
Although interest rates are still low, home prices are starting to rise. Buyers will want to take advantage of these low rates instead of waiting. To win out in a multiple-offer scenario:
- Taking the time up front to get qualified by your lender is great advice in a hot seller’s market. When you submit an offer, the fact that you have been qualified, rather than just “checked-out” by a lender will add weight to your offer. It certainly increase the seller’s confidence in your ability to follow through on a contract.
- When you see a home that you like, don’t wait too long to see it. You have to be flexible and make time to see a house as soon as possible. Unfortunately, we’ve had many situations where our buyers scheduled showings a week out, only to find the home was under contract before they got a chance to even tour it. Even though some people prefer to take their time and not be pushed, they find that they often miss out in a bustling seller’s market.
- When you find the home that you want to buy, make an offer. Don’t hesitate to pull the trigger. You want to be the first offer. In doing so, you just might get the home. So you really need to know your mind.
- Buyers should strongly consider offering more in a competitive situation, rather than insisting that they get a deal. The days of getting deals are behind us, especially in a high-demand market. Your insistence on getting a bargain will most likely leave you out in the cold.
- If you find that you are in a competitive situation, you may get the chance to change your offer if a seller asks for the “highest and best”. You may want to increase your offer, or you may want to edit your contingencies, or increase your deposit, or a combination of all of these. It really depends on the situation. This is not the time to equivocate if you really want the house.
😢Don’t Over Negotiate
- Your buyer’s agent should be a good source of advice in a multiple-offer situation. Be sure to choose an agent who knows the neighborhoods, the values and the current market trends. Negotiation should be one of your agent’s strongest skills. Understand that your buyer’s agent’s advice is based on past experience and is not a guarantee of any particular outcome.
- Be flexible on your timing. If the seller needs time to find their next home, your offer will be favorable if you give them that time. If, on the other hand, the seller needs to move quickly, make sure you move as quickly as you can. This is another great reason to take the steps necessary to be qualified with your lender before you make an offer.
- If possible, get to know your seller’s motivation. A good buyer’s agent will work with the sellers agent to figure out how to create a win-win scenario for all parties. When negotiating with a motivated seller, it helps to find out what they desire most, and work that into the negotiation.
- If you are selling your home and buying…it may be scary, but in a competitive offer situation, you will most likely need to have your home already sold. You will be in competition with other buyers, many of whom may not have a home to sell. Plan to put your best foot forward. Anticipate the competition and make your best plan. See more tips: Advice for Buyer’s When the Real Estate Market is HOT!
🤔Tips for Sellers in a Multiple Offer Scenario
Although it is a seller’s market here in Frederick Md, as in more and more areas of the country, sellers can’t assume that they can get an unreasonable amount for their home. Read more about a buyer’s or seller’s market. Even if there are multiple offers, there is a limiting factor to those escalating offers. The house must appraise for the amount it sells for. The appraisal is sometimes referred to as “The Second Sale.”
The appraisal is based on the most recent sales, usually 3 to 6 months, so those sales are likely going to be less than yours in an appreciating market. Although appraisals can ‘stretch’ to higher values, so-to-speak, to expect a price that is a large leap from the previously sold homes is unrealistic.
✔️✔️✔️Many Negotiating Points
When a seller considers all offers, they’ll want to consider more than just price. Although of course the ideal scenario would be to get the highest price, there are other issues to think about. Your negotiating strategy will need to be reviewed with each potential buyer. Other important considerations are:
- The buyer’s down payment. Sometimes a higher down-payment signals a more serious buyer.
- The buyer’s contingencies. If you have multiple buyers, you should compare the details of the contingencies. Time frames, inspections, and other negotiating items should be considered. If you find something you can negotiate with, while the other items are agreeable to you, you may have a better chance at a win-win.
- The buyer’s financing situation. Your agent should be able to fairly vet their financing, including the lender and the loan program. We have had situations where we advised sellers to choose one offer over another based on the veracity of the buyer’s financing, as well as the reputation of their lender.
- The buyer’s need for closing cost assistance. Many first-time buyers may not have the cash to cover all the requisite closing costs. You may find that the buyer who doesn’t need any assistance may be your best offer. You also may get an offer higher than your price to cover the extra needed for closing cost assistance. Both are worth consideration.
- The buyer’s ability to deal with the situation of an appraisal that comes in low. It can and does happen in an appreciating market. If you want to try to get the highest price possible, make sure you know the risks of not getting an appraisal to corroborate that high price, and make a plan with your agent to deal with that scenario.
- As with a buyer’s agent, your listing agent has advice for you based on their past experience and can’t guarantee a particular outcome. The real estate transaction has many moving parts. Additionally, every buyer has their own set of goals, values and personalities, making each situation somewhat unique.
😃A Realtors® Experience Matters
Whether a buyer or a seller, you should expect fair and honest treatment throughout the offer and negotiation process, coupled with prompt, ongoing and open communication. Always remember to keep your eye on the goal: buying or selling your home. No real estate transaction will ever be perfect. Remember not to let emotions rule and you’ll have the best chances of a win-win.
Make sure your Realtor® has experience in transitioning real estate markets, or if they are new to the industry, that they work on a team with other seasoned agents. A skilled, local real estate agent can help you tremendously as you navigate any market, whether a buyer’s or seller’s market, or a transitional market.
😅Best and Last Tip: Keep a Cool Head in Negotiations
Buying and selling a home is a process that includes emotions. Sometimes negotiations can make people tense. Although the real estate transaction is a financial process for both parties, it is also an emotional process.
Sellers: Detach from your nest. Remember this is an asset consisting of bricks and sticks.
Buyers: Even though you’ve fallen in love with the house and envision your future there, keep it under wraps! The dream won’t come true unless you make it to the finish line.
Contact the Highland’s for real estate representation in a seller’s market. 301-401-5119.
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Chris & Karen Highland
eXp Realty – 301-301-5119