In the past several years, home buyers have experienced a fantastic buyer’s market. Well-qualified buyers have had their pick of the best homes on the market, and could often negotiate down prices or gain fabulous concessions from sellers who just want to sell. But as the real estate market begins to recover, multiple offers are becoming more commonplace in certain parts of the country. What does this mean for you as a buyer?
Multiple Offers Occur Due to a Decline in Inventory
Basic economics 101: when demand outstrips supply, prices go up and buyers face competition for desirable products. This holds true across the home buying market. When there are more homes on the market than there are buyers, buyers have their pick. They can find the home that best suits their needs, make whatever offer they feel is reasonable, and are often successful in negotiating with the sellers to get an advantageous deal.
But when demand outstrips supply, things are different. Sellers often have multiple offers on the table, and they can choose the offer that best pleases them. This may be the offer with the highest price or the biggest downpayment – or they may select the offer of a well-qualified individual who isn’t asking for any contingencies. If multiple offers are a possibility in your area, you should be prepared to sweeten the pot if you really want the home.
How to Succeed in a Competitive Home Buying Marketplace
If you’re buying a home in a part of the country where multiple offers are coming back, you need to be ready to make your offer more attractive to sellers. You can do this by removing contingencies – in some parts of the country, buyers are even writing out appraisal contingencies with the understanding that they’ll cover any shortfall in appraisal out of their own pocket.
You can also make sure you’re well-qualified; a seller may select a buyer who is already pre-qualified and has financing in place just to ensure the deal goes through. Find out what the hot buttons are for your seller, and tailor your offer to appeal to the things they value most. Otherwise, you’ll just get caught up in a bidding war, and the only person who comes out ahead is the seller.