As many of you know and have likely experienced, the multiple-bid situation is happening more and more these days. Especially with homes priced under $1 million in such towns as Weston, Wellesley, Wayland, and Needham, multiple bids have become more of the norm than not. Given this current state of affairs, I wanted to share a few quick tips to help with the process when you are buying a home and either anticipate being in a multiple-bid situation or find yourself in one:
- Visit the property more than once – sometimes this isn’t possible if the property comes on the market, and there are five offers on it that same day. But if you have the luxury of going back to see the home a second time, make sure you do. You often see new things or view things differently on a subsequent visit. A second showing may ultimately make or break your decision to put in an offer.
- Find out what’s most important to the seller – usually, it’s price, but often closing date, your plans for the house (i.e., tearing it down or renovating it) or other such matters can be equally as important. It’s crucial to know this information before you write up the offer.
- Put your best foot forward – you may not get a second chance so make the offer the strongest you can muster. That being said, the inspection contingency (unless you are knocking down the house) is something you always want to include. If you feel comfortable financially and can eliminate the mortgage contingency, this can significantly strengthen your offer in the eyes of the seller. But this is something you have to consider very seriously because if you don’t have a mortgage contingency and don’t get financing, you will be losing your 5% deposit, which can often be sizable. If you’re not comfortable with taking out the mortgage contingency, the other option – if feasible – is to put down more money and reduce the amount you are borrowing. This can also serve to lessen the seller’s anxiety about the mortgage commitment process.
- Picking your “best and final” number – make sure the final price you give is really your best and final. This way if you find out that buyer party #2 got the house for just $1,000 more than your bid, you won’t be devastated because you weren’t willing to pay any more than your best and final number. It helps if you think about this final price in those terms.
- Show your commitment to the home purchase – put down more money as a deposit. It is standard where we live to put down 5% at the P&S (purchase and sale agreement). Often in a multiple bid situation, however, you will see buyers increase that amount to 10%. And though it’s just a gesture, because the money doesn’t even touch the seller’s hands until the closing, it does show your deep commitment to buy the house.
- Get your offer in on time and have all of the pertinent paperwork attached – if there is a deadline for offers, and you are late in getting in your paperwork, you could be doing yourself a disservice. The paperwork at this point in the process usually includes the offer, contingency addendum form, agency disclosure, pre-approval letter, copy of the offer check and completed lead paint form.
- Keep your fingers crossed and a smile on your face – if you tried your very best, and you did not end up “winning” the house, don’t despair. Either the deal will fall apart and you will have a second chance at the house. Or more realistically, you will find another home that is likely better suited for you. I know it sounds cliche, but “what’s meant to be, will be” – and 9 times out of 10, this is true and a good thing too.
Another factor to keep in mind is that you might want to communicate some personal background about yourself. This really depends on the scenario, and it is completely up to you and your comfort level, but sometimes adding some personal information can help the seller identify with you. On the other hand, sharing personal information can also work in reverse. But it’s something to keep in the back of your mind and weigh the pros and cons in each particular situation.
What are your thoughts on this subject? Have you ever been in a multiple bid situation(s)? If so, how did you fare? Are there other tips you would add to help with the process? I can’t wait to hear.
