You’ve just started your home search and found a property that checks all the right boxes—large yard, updated kitchen, bonus room—even an electric car hookup.
But before you submit an offer, your agent says there are already multiple buyers. Now what?
If you really, really want that home, you’ll need to make your offer stand out. Here are a few ways to do so.
The ‘Highest Bidder’ Myth
In a multiple-offer scenario, it’s reasonable to believe the buyer who offers the most money will win. But that’s not always true.
In fact, according to the National Association of Realtors, price is only one of several factors that determine which offer a seller accepts. Financial terms, closing speed, earnest money deposits and other factors can make offers more appealing to a seller than the one with the highest price.
For instance, maybe the seller just had a deal slip away and is looking for a real commitment. Or perhaps they need to close by a certain date because of a move or another home purchase. A good buyer’s agent will dig for information about what matters most to the seller, which you can use to shape your offer.
Come Preapproved
In a competitive market, most sellers won’t even consider an offer that doesn’t include a pre-approval letter from a lender. So, getting preapproved really needs to be your first step.
A preapproval involves submitting a loan application and providing documented evidence of your finances, including your income, credit, debts and obligations, and overall budget. Once your lender has verified all this information, they’ll preapprove you for a mortgage program that fits your needs up to a certain dollar amount.
This is different from a “prequalification,” which is usually a quick estimate based on a soft credit check and unverified income figures that you provided yourself. A prequalification carries little weight with sellers because a lender hasn’t actually confirmed your finances. A preapproval gives the seller stronger evidence that you’ll be able to follow through.
Show You’re Committed
Another confidence-builder is earnest money, which is the deposit you make when submitting an offer. Earnest money is typically held in an escrow account and applied toward your down payment or closing costs at closing.
It’s up to you how much earnest money you want to offer. The typical amount is between 1% and 3% of a home’s purchase price. If there are multiple offers, a larger deposit can let the seller know you’re truly serious about buying their home. Just be mindful that if you back out of the purchase contract without a valid reason, the seller may be entitled to keep some or all of your deposit.
Be Strategic with Contingencies
A contingency is a condition added to your purchase contract that allows you to back out of the deal if that condition isn’t met and keep your earnest money.
In a multiple-bid scenario, putting too many conditions into your offer could be risky. However, some contingencies may be tied to your loan and can’t be removed.
Your agent and your loan officer can help you understand which contingencies are flexible, which aren’t, and how to put together an offer that protects you without looking too demanding to the seller.
Be Able to Close on Time
More than anything, sellers want to know that the deal will actually close, and close on schedule. Because financing issues are among the most common reasons transactions get delayed or fall apart, choosing the right lender is critical.
A lender that has a solid reputation, responds quickly, and keeps your file moving through underwriting without unnecessary delays can make a real difference in how your offer is perceived and whether you will close on time.
This is exactly why we created the Right By You Guarantee. When you work with us on a conventional or VA loan and meet a few simple requirements, we guarantee your loan will close on time. If it doesn’t, we’ll pay both you and the seller $500.
When your agent presents your offer, they can let the listing agent know that your lender offers an on-time closing guarantee—and is confident enough to put money on it.
Ready to put together a strong offer on your dream home? Find a local mortgage loan officer to get started or email us at inquiries@rightbyyoumortgage.com.
