Ottawa’s real estate market has taken off. We are seeing multiple offers all over the place. Multiple offers are great for a seller, but they can be frustrating for a buyer. Here are my tips on how to compete:
Make a bully offer. The listing says, “No offers until Thursday at 6.” It’s Monday. There are people streaming through the house when you go to see it, and you want it. What do you do?
Well, you don’t have to wait until Thursday. Your agent can submit an offer now, but it better be a good one, or the sellers aren’t going to respond. They know by waiting until Thursday, they’re likely to get multiple offers and top dollar.
So put in your best offer now. The listing agent will have to notify all the interested parties about the offer and let them know when it expires so they have a chance to compete, so don’t give a long irrevocable period, just long enough for the listing agent to get hold of the sellers and make a decision. Give too long and you’ll be in a multiple offer situation anyway.
If the seller says, no thanks – we’re going to wait until Thursday at 6, get a home inspector lined up or a friend who’s a contractor and go through the house before then. If you’re still happy with what you find, call your mortgage broker and make sure your financial ducks are in a row.
Get an offer ready with as few conditions in it as possible. An offer that doesn’t have conditions, or fewer than the others, is appealing to a seller: if they sign it, they’re done. The more conditions there are, the more likelihood there is of something going wrong and the deal not going firm. They’ll take less money for less risk.
Make your very best offer upfront. Most times you won’t get a second chance in a multiple offer situation. Yes, it’s a blind auction and you don’t know what anyone else is offering.
But here’s a rule of thumb: If there are more than two offers, forget about getting the property for $ 5-10K over asking; you’ll need to go a lot higher than that. In most multiple offer situations, the listing agent has priced the home 5-10% below market value to get interest, so use that as your guide.
If 5-10% higher than the list price is what they think market value is, how much over that are you willing to pay to get your dream house? Remember, house prices are up 8% over last year in Ottawa so factor that in when you are looking at comparables: they are already out of date.
Take your realtor’s advice. Several times I’ve gone into a multiple offer situation with offers I know won’t be accepted because my clients haven’t listened to me, and are going in too low, or with too many conditions. Listen to your realtor; they know the business, you don’t.
It’s about relationships. A house deal is not a zero sum game. It’s not just about money. Sellers love people who love their homes. Where two offers are close, they’ll tip towards the person they like: It’s human nature.
I was successful in a multiple offer situation with a buyer (eleven other offers) who didn’t have top dollar because I found out the sellers were from Newfoundland and so was my buyer. I made a point of presenting my offer in person and mentioned that connection, as well as how much he loved the art in the house because it reminded him of home. He got the house, and the sellers even left behind some of those pieces of art for him, because we built that relationship, just in that brief interaction. But they later told me about agents who came in thinking they could get the house for less than list price by bad-mouthing it. Not a good strategy.
Meet the sellers’ interests. If the sellers want a June 1 closing date, give it to them, even if it’s inconvenient to you. If they want to keep the mirror in the powder room, and you love it and want it, let them take it with them and ask your realtor to tell them how beautiful it is and to ask their agent where they got it. Either way they’ll be flattered, and they may just leave it behind.
In one multiple offer situation, we found out the sellers had lost a prior deal over a leaky skylight. I made sure to assure them that we’d take care of that problem and that they could count on my buyers to complete the deal. My buyers didn’t make the highest offer, but they got the house.
Always be reasonable. I’ve had multiple offers come in where I knew the agent and had problems with them in the past. When I’m advising my sellers what to do, what do you think I tell them in that situation?
I learned at Harvard when I trained in Negotiations to always be trustworthy, but never trust anyone else. It’s advice I bring with me into negotiations in multiple offers as well. A person who is difficult to deal with during offer negotiations will be that much harder to deal with in the stress of an actual deal. Be reliable, and be reasonable. Sellers and their agents will respond to that, and it might well be the tipping point in getting you that dream house.