Have you ever tried threading a tiny needle only to fail about seven times and prick yourself in the process before finally getting that wiley thread through that pesky hole? Well that’s pretty much what it feels like to be a homebuyer in the metro-Atlanta market right now. It’s brutal out there with only about a one in five shot (give or take) of your offer getting selected for homes first on the market. It’s not uncommon for any new home on the market to have five offers within the first few days of listing. And that’s an average – I recently listed a condo in Kirkwood that had nine offers within two days. For the eight buyers that walked away disappointed, that’s really rough – particularly if, like many buyers, this isn’t the first time. Unfortunately, real estate agents don’t possess a crystal ball and there is no magic formula for becoming “the chosen ones” in this market. However, there are a few things you and your agent can do to help your chances of getting that house:
- The early bird gets the worm: You can’t make an offer on something that you don’t know about. It’s imperative that you and your agent know when houses that fit your specific criteria hit the market. One method, which I commonly use, is to set up alerts that send you an email as soon as a listing with specified criteria hits the MLS. After you know a property is available, it’s equally important to see the property within the first day or two of listing. I’ve had countless agents call on day three to set up a showing only to find that the seller is already in the middle of negotiating a contract.
- Building rapport: I recommend that buyers’ agents always call this listing agent whenever a property is likely to land multiple offers. Talking with the listing agent on the phone can go a long way. Your agent may be able to glean key information that will help your offer based on the specific circumstances of the seller. Things like closing within a certain time period, preferred financing/lenders, or other terms that may be more favorable are all factors which sellers consider when selecting an offer. It also helps to impress upon the listing agent that they are working with a great agent who will do what it takes to get the job done.
- Money (financing) matters: I recommend taking the time to find a great lender. There are a lot of mortgage lenders out there, but a lender that has a track record of success with your specific market is likely your best bet. And by that I mean closed, on time, and with as little hiccups as possible. It may initially seem ideal to use XYZ online company because it’s “hassle free” but if they have a terrible reputation it will reflect badly on your offer. An easy way to narrow down the field of lenders is to talk with your buyer’s agent and ask them to provide some referrals. Once you’ve selected a lender get a pre-approval letter. If you want to be even more competitive and are in a great place financially, some lenders may be able to have your loan squared away before submitting an offer. This allows you to waive the finance contingency (number of days needed to obtain financing as written in the contract) which puts you in a better position with the seller but without additional risk to you as the buyer.
- Put your best foot (loan) forward: Many buyers, especially first time buyers, are attracted to FHA because of its low down payment, but there are nuances that you need to be aware, for example FHA guidelines and hoops. In practice this means that a buyer using an FHA loan may be viewed as more risky – if something about the property failed to meet an FHA guideline, the financing and ultimately the deal would fall through. Conventional loans don’t carry these same risks. To be clear, I’m not discouraging the use of FHA loans. In certain circumstances FHA may be an awesome option like when a property is lingering on the market for several months. Conventional loans typically mean a speedier closing process which can be very attractive to seller’s in a competitive market. Buyers should also consider their down payment options when trying to win a multiple offer situation. A buyer able to put twenty percent down can often appear more qualified due to the large amount of cash on hand. Obviously not everyone is going to be able to put down 20%, but make sure you explore all your options for making that down payment a bit more robust. For example, many buyers may only have 3% but also qualify for down payment assistance programs. Ultimately, a 5% down payment compared to 3% may be the nudge needed to make your offer the strongest. You can check out some down payment resources here.
- Other things your agent can do: The contract terms will always play the most important role, but there are other considerations to keep in mind. As mentioned above, having a conversation and building a relationship with the listing agent can go a long way. Some other suggestions, in no particular order:
- When your agent submits the offer it’s often helpful to highlight the terms of the offer in a clear and concise way and stress what a great buyer you are.
- Ask your lender is willing to have a conversation with the listing agent as well. Having your lender call is a great way to show the seller that you are are qualified buyer and ready to go.
- Lastly when a listing agent gets 5 to 10 offers that’s a lot of paperwork to go through to present to the seller. One little thing that can help speed that process along is to have your agent send the offer as one PDF. Putting the offer together for the listing agent is not only a nice thing to do but it sets the tone for the transaction.
None of these will make an offer substantially more competitive; however, if all else is equal and your offer is in contention to be selected, these little things can help a seller to feel confident that you are the party they prefer to work with.
I’ve won some very competitive bidding wars and I’ve also lost some. However, I do believe that following these tips can give you an edge on the competition more often than not – and it’s certainly not going to hurt you. Happy hunting!