Multiple Bid Situations
In this competitive Montpelier, Barre, and Northfield real estate market, it’s pretty common to see bidding wars (or, to be less dramatic, “multiple bid situations”). And it doesn’t matter whether you’re the buyer or the seller, it’s stressful.
At Green Light Real Estate in Montpelier, we have years of experience, and have navigated countless multiple bid situations with our clients. We’re good at helping our clients get the results that they want. Our team approach also means that all of our agents work together to help all of our buyer and seller clients develop successful strategies.
As a buyer, you’ve got to think very hard about what really is your best and final offer. Often it comes down to price. Actually, most of the time it comes down to price. But NOT always. We start by talking with the seller’s Realtor and trying to find out what would mean the most to the seller. You’d be surprised at some of the responses we get.
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For example, one time we had a seller tell us that what mattered most was being able to close after a certain date. Turned out that, yes, in fact, the buyers could wait until that date. We won the contract, and the buyers bought the house.
Another strategy that we use employ when trying to win a bidding war for Montpelier or Barre real estate is limiting the scope of the appraisal contingency. For example, if we’re going to end up paying above asking price, (in a multiple bid situation, that’s very often the result), then we could cap the appraisal contingency to the asking price. It’s dirty pool to offer $325,000 on a house listed at $285,000. The reality is that the house isn’t likely to appraise for $325,000. So, what, as a buyer, are you then going to lean on your appraisal contingency? Instead, what if you capped the limit on the appraisal contingency to $285,000? That gives the seller much more confidence in your offer, and makes it much more likely that you’ll get the house.
We can also arrange the inspection contingency such that it excludes certain items, or has a minimum dollar limit on repairs. One time we worked with a buyer who was buying a house that had a tree literally laying across the roof. So, instead of playing games with the seller, we simply acknowledged that the roof was not part of the property inspection contingency. Was that a risk taken by the buyer? Not really, since they knew they were going to replace the roof right away anyway.
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Larger deposits and larger down payments also sweeten your offer. We’ve used staggered deposits as well as a schedule for making deposits non-refundable. That sounds a little scary, doesn’t it! But if you’re solid on your financing, why not make some of the deposit non-refundable after the inspection resolution? If you’re not so sure about your financing, then you probably don’t want to do that. Which means the other offers might be stronger than yours. A move like this shows confidence and certainty that you’re going to buy the house.
One more idea is to use an escalation clause. With an escalation clause, you agree to pay a certain amount more than any other offer, up to a cap. If you’re bidding on a house for sale in Barre that’s listed at $229,000, you might offer $229,000 and agree to pay $2500 more than any other bidder, up to a maximum purchase price of $240,000. And then, how about pairing that with an appraisal cap of $229,000? Yummy! Your seller is going to LOVE that offer, and you’re really likely to get the house.
Anything that we can do on the buyer side to increase the “probability of closing” makes our offer more attractive to the seller. These aren’t all the techniques we use to win a bidding war. And we wouldn’t several or all of these at once. Each negotiation is different, and we have to be creative and thoughtful. When you buy a house with Green Light Real Estate, you know you’re going to get intelligent, experienced, and creative advice.
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Basically, you can take all of the ideas above and look at them through a seller’s lens. Wouldn’t it be great to have a limited appraisal contingency, a limited inspection contingency, timelines that you want, a larger down payment, a non-refundable deposit, and more? You bet it would!
It’s a little different on the seller side. If you’re a seller and you get a multiple bid situation, you have to look very carefully about how you can reduce risk. And of course, get a higher price.
The same techniques that buyers use to make their offers more attractive are exactly what you’re looking for. We actually talk about three points that make the best offer. Highest price, best terms, and highest probability of closing.
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Sellers look for higher down payments as well. Borrowing 100% for a VA or RD loan comes with some appraisal strings that a loan of 90% doesn’t have. So, all else equal, sellers will go with an offer that has a larger down payment.
If you’re selling a house in Montpelier and Barre, get the best advice you can. That advice comes from the experts at Green Light Real Estate. Contact us today firstname.lastname@example.org