Luxury Home Buying: Multiple Offer Situations
Recently, during the height of Spring markets, it was not unusual to see homes getting “bid up” anywhere from three to five percent. Now it’s not uncommon for Listing Agents to see ten to fifteen percent price escalations on quality homes in good locations.
How to Make Your New Home Offer Stand Out
In such a competitive market, how can an agent make a client’s offer stand out? First, I like to begin by calling listing agents and asking about similar homes that are already under contract or pending to see if they can share some information on their listing. I’ll ask questions like: How many showings did they have? How many offers were submitted? What did the offers look like and what was the contract price? Answering these questions helps us understand how competitive we need to be in our client’s offer.
Loan Termination Deadline as a Bargaining Chip
Generally, the Loan Termination Deadline ranges from a week before closing, up to the day of closing. The buyer can get their earnest money back if the loan does not close prior to this deadline. However, it is not uncommon to make contract provisions that could swing the potential deal in our favor. One of those provisions is waiving the Loan Termination Deadline. This may seem foolish, but our strategy protects the buyer.
Through our lender, we can connect you with an Earnest Money Guarantee. This means your loan would be taken through underwriting before contract to guarantee a close. By waiving the Loan Termination Deadline, your earnest money is still protected, and the seller has protections against issues with the loan closing. This gives them some assurance that they won’t need to start the process all over again with a new buyer.
More Ways to Set Your New Home Bid Apart
Waiving certain inspection items is another clause that can set your bid apart from the pack. In this market, due to such high demand and competition, it can create complications to negotiate for a seller to fix minor cosmetic issues such as door handles or re-painting. The point of the inspection is to identify the big-ticket items, so by limiting your inspection items to major issues like roof, structural integrity, electrical, plumbing and sewer, you are providing assurance to the seller that you will not nickel and dime them.
Post-closing occupancy agreements can also provide non-monetary consideration for your offer. Some sellers are in a time crunch with moving and overlapping dates can be tricky. Often, sellers will need the cash from the closing on their sale to close on their new home and move in. In this case, it might be a good tactic to provide the seller a week or two in a Post-Closing Occupancy agreement. By waiting a week to take possession and allowing the seller time to move, you may have a better proposal than someone who maybe offering a slightly higher price with no provisions.
How do I know what to bid when shopping for a new home?
When submitting offers in such a competitive market, it is a best practice to make your best offer up front. If you are having trouble arriving at an offer price, try the following exercise:
Start at the low end of your offer range and say to yourself “if I get this house at this price, am I happy? If someone bids higher than me and I lose, am I still happy”. If the answer to both questions is “Yes,” then you can be content that you have arrived at a solid offer. If not, it might make sense to adjust your offer.
Sophisticated Properties Can Help You Buy the Perfect Luxury Home
If you’re in the market for a luxury home in or around Greater Denver, don’t hesitate to reach out to the team here at Sophisticated Properties. We are more than just realtors™, and we have the experience to help you find the perfect luxury home and make a winning offer without breaking the bank.
And for those of you who are looking to sell your current home, be sure to speak with us. We have a simple evaluation process that can help you determine whether selling or leasing your luxury home makes the most sense for your situation. And we are one of the few realtors in the area that can handle both. When you decide to sell or lease with us, we list your home and find quality buyers and tenants. In short, we take the work of buying, selling, or leasing a luxury home off your plate.