Why your offer didn’t win and what you can do different next time

Multiple offer situations are fairly common – especially in high-demand markets, and even more so for first-time homebuyers. The odds are pretty good that if you found the perfect home that’s priced right, everyone else found it too. If you’re actively concerned about running into multiple offers, it’s probably a strong market where demand is high and supply is low. When you’re ready to buy, understanding the current housing market is key.

So what do sellers want? A seller wants a smooth, usually quick, transaction without any hassle or headaches. Here’s what you can do to make that happen.

Purchase Price – If you are facing multiple offers, come in strong right out of the gate. This means you will likely need to overbid. Are you willing to lose the house you fell in love with to another buyer over $5,000? Or $10,000? What your purchase price ultimately should say is that you are serious, but don’t rush to offer more than the home is actually worth to you. Overpaying is a common reason for buyer’s remorse.

Earnest Money – Show the seller that you are serious about purchasing their property by increasing the amount that you put up as earnest money once your offer is accepted. If multiple offers are on the table, you should expect to put down a minimum of 1% of the purchase price.

Quick Closing Date – Unless the listing agent has disclosed the seller’s desired sale date, offer to close on the property as fast as possible. That means with most mortgage financing, you’ll need a closing date roughly 30 days out. If you are doing a cash or contract for deed offer, 10 days is very possible.

Avoid Contingencies – Whenever it is possible, avoid making your offer contingent on as many things as you can. An offer that is contingent on financing, selling your current home, appraising at a higher value than asking price, and even a home inspection will likely lose to someone who can skip all the contingencies and make the offer less “risky” to the seller. If you want to come out on top in a multiple offer situation, you should eliminate as many contingencies as possible. However, the more contingencies you eliminate effectively takes risk off the home seller (which is why it’s attractive to them) and instead puts that risk on you the homebuyer. Discuss contingencies with your agent (if you are in Southeast MN or Western WI, that’s me 🥰). There are many creative workarounds available for many of them.

Have Strong Financing – First, don’t shop at the top of your budget. If you are approved for $500,000, make sure you are looking at homes that are priced well enough below that you have a good amount of wiggle room. The average home in Southeast MN is currently selling for 3-5% above asking. On a $500,000 home that goes into multiples, dont’ be surprised if it sells on day one for $525,000. The more cash, the better. Discuss with your lender the option of an all cash offer. There are several loan programs that finance a home as a mortgage on the back end with you but are legitimate cash offers to the seller. An experienced real estate agent and loan originator (cough cough, me 😁😁😁) can help you explore these options.

Get Creative! It’s still possible to lose out on a property even after making a strong offer that pays full price, covers your own closing costs, and finishes closing quickly. To go above and beyond a clean full price offer, you might need to get creative to finally land that home. Here are a few tips to help your offer stand out from the rest.

1. Offer to pay the seller’s closing costs and/or moving expenses. The higher the price rises above the original listing price, the more likely the transaction will experience appraisal value issues. When you offer money for closing costs or moving expenses, the seller gains the financial benefits without being added to the home’s sales price. This tactic bypasses the appraisal and reduces the additional commission making it much more appealing.
2. Avoid personal letters. Clean offers that stick to the numbers and keep the emotion out of the deal are always more appealing. Most listing agents will not even present a personal letter to their clients in today’s legal environment even if you submit one. Once a common tactic, this practice caused fair-housing lawsuits because buyers would assume the seller rejected their contact due to race and social class. By attaching a personal letter to your offer, you create extra tension for the listing agent, which will not help you in any way.