After months of searching, you’ve found the perfect house and you’re ready to make an offer. You’ve decided on your offer price and your getting ready to write the offer and have it sent over to the seller.
This is one of the most exciting times in the home buying process. You’ve seen hundreds of homes online. You’ve seen a dozen, or more, in person. This is the one that has everything that you’re looking for. All you have to do is get your offer in, maybe negotiate a bit, and get ready to move into your new home. Then, your agent calls.
“So, I just got off the phone with the seller’s agent and they have another offer in hand. They’re also expecting another to come in later tonight.”
After a brief silence you say, “What do we do?”
Unfortunately, this is a situation that happens a lot as real estate markets have shifted into seller’s markets. There’s a shortage of supply and a lot of demand. Recently, I had a client who made an offer on a house that had 10 other offers (it sold for more than the asking price). I tell buying clients that if they fall in love with a house that just hit the market there’s a good chance someone else has, too.
So, what can you do?
- Expect some sleepless nights. After you’ve submitted your offer the seller may take a few days to get back to everyone. Sometimes they’re waiting for other offers to come in, sometimes they’re negotiating with the person who made the best offer, sometimes they’re on vacation. As you’re sitting up at night you’ll think of more possibilities.
- While the goal is to get the house you love, your competition has the same goal. They’ve seen the same houses that you have and they know what’s out there, as well. They’re going to put in their strongest offers (and you should, too). Price is the most important factor, but terms can have a major impact. If two offers are financially similar, the seller may decide based on something as seemingly small as the buyer’s choice of using a big bank vs. a local lender for their loan (local lenders tend to be much easier to work with so it’s an advantage).
- You may have to take the gloves off. This is the house that you need to have (and you’re probably tired of looking). An experienced agent can talk you through using an Escalation Clause. An Escalation Clause bumps up your offer price by a certain amount above another offer (though you’ll want proof that the offer is real and want to put a limit on the highest amount you’d pay). Another strategy that can be successful is to limit the inspection negotiations to certain items and/or limit negotiable issues to items that cost over a certain amount. When choosing a real estate agent you’ll want to be sure that they’re familiar with these strategies (they’re not taught in real estate school).
Buying a home is stressful and there can be plenty of hurdles along the way. This is especially true for first-time home buyers since they haven’t been through it before. Being a well-prepared home buyer and knowing what to expect along the way is a great way to minimize the stress and, hopefully, help you get that perfect house on the first try.
Have a question about home buying? Ask in the comments below or send me an email at firstname.lastname@example.org.
You can get more information about buying a home at my upcoming info session, “How to Buy Your First Home” on October 3rd 2017 at Taqueria Feliz in Manayunk. Space is limited so RSVP’s are required. RSVP at http://www.jonmillerhomes.com/how-to-buy-your-first-home-info-session-2/