I was recently at a continuing education class and so many realtors were whining and complaining.  At one point someone asked if anyone remembered the days of multiple offers and if anyone had any recently, so up my hand went.  I was the only one.  These obviously weren’t listing agents of foreclosures, but then again, neither am I. 

 Not only will you run into mulitiple offers on foreclosures, but you will on any home in good shape that’s priced right.  The biggest mistake I see in pricing right is pricing based on the listing prices of comps, not the actual sales prices.  If you price based upon sales prices and have the home in great showing shape, that’s all you need to do to get multiple offers.  Also, pricing just above a very common search parameter will leave you lagging behind.

 What if you’re on the buying side and trying to get noticed in the crowd of multiple offers?  What do you do then?  This has kept me busy lately.  Gone are the days when you show a few houses and the client picks out the one they like.  In the past 6 months I’ve had several clients had to make atleast five OFFERS before they could get a contract on a house.  And that’s not including how many I called to check on before placing an offer to make sure the seller (usually the bank) hadn’t already accepted an offer.  There were probably twice as many as those.

 So how are we getting them into homes?  Well, as a realtor I let them know on the front end that’s how things are right now when you’re trying to buy a hot deal (usually foreclosure).  Of course, they can be hesitant at first so we go through several rounds of making offers that get rejected or countered or sent out for best and final (common when there are multiple offers on the table).  Then, the clients get serious about listening to me.  Now what do we do?  WE ACT FAST!

If the comps show the house is priced right, we go in at least at list price.  If the comps show that it’s overpriced we either walk away or submit a fair offer and expect that there may be other buyers out there that automatically assume a foreclosure is a good deal - they’re not. 

I ask the listing agent prior to making the offer if there are other offers on the table or if there have been many showings.  They’ll often tell me.  If the answer to either of those is yes, we go above list price.  I don’t have a formula but together we decide what we think the other offers may be.  This varies on the price range we’re working with.  Then, I encourage them to top that (by how much again varies with the price range). 

We also add on to the purchase price any concessions being requested by the buyer - most often closing costs.  One instance where I don’t do this is a home warranty plan.  Home warranties are inexpensive.  Rather than ask for it and add a few hundred to the offer price, I like to leave them off.  The buyer can purchase this.  The cleaner and easier the offer looks, the better.

We submit the offer with a strong preapproval letter stating that assets, income and credit have already been checked.  If the client allows it, we include the FICO score.  We also send a copy of a BIG earnest money check.  It shows you’re serious.  Every little thing you can do can help.  Sure, a lot of offers are submitted online with the net amount automatically calculated, but not always.  When the seller is looking at more than just the net number, it’s not always the highest offer that wins - it’s the best offer.  Unless you’re up against a cash buyer, usually a strong preapproval letter and a big earnest money check will make your offer more attractive than one that may even be higher.

 We doublecheck with the lender to see what the best estimate is for the closing date and put that in for the closing date.  Previously I was seeing the bank addendum’s coming back with a per diem for each day the transaction closed late - usually $100 per day, but now I’m seeing them come back with that crossed out.  I’m glad to see that go. 

Another important step is to check with the listing agent to find out what the seller’s response time is.  Sometimes the bank’s have the automated systems with offers submitted online and quick response times.  Other times the banks can take forever.  Find out what you’re dealing with and adjust your offer expiration accordingly.  Don’t give them too much time to get another offer, but don’t let the offer expire before they can get back to you!

 I said it before, but I’ll say it again.  You have to ACT FAST!  Remember there’s an inspection contingency.  This isn’t like several years ago when you could go and view the home a few times and sleep on it and make your decision.  You need to get your offer in.  If something comes up in the inspection process you can negotiate to get that remedied or walk away.  You’ll get that big earnest money check back.  It’s a myth that the banks will do nothing.  If repairs need to be made for loan approval, you can usually get that done.  I even know someone who recently negotiated new paint and carpet on a foreclosure!  Yep! 

 So don’t be discouraged if you’ve been trying to get your great deal for 6 months now.  It can be done!