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6 Tips to Winning Bidding War

September 8, 2020

Having to compete in a multiple-offer situation on every offer has forced agents to come up with every possible way to make their buyers’ offer the most attractive to the seller. Of course, all of these options are predicated upon the comfort level of the client. One or all of these options could be appropriate, depending upon the situation.

1. Employ an escalation clause

Start by running comps. The offer will likely need to be over the list price. That being the case, how much over the list price do the comps support? Additionally, how much do you believe you will need to offer given the condition and location of the home? Once you determine a “cap” for the offer, suggest an escalation clause up to the cap amount.

2. Cover the appraisal gap

Appraisal gap coverage is another seller-pleaser. It means stating in the offer that the buyer will cover any shortage between the offer price and the appraised value. It’s always a good idea to cap this amount as well. Any shortage amount will increase the down payment for your buyer. You will want consult your clients on the amount they’re willing and able to afford.

3. Make inspections easier

The inspection is another area to set the seller at ease. Here are a few ways to make your offer more attractive:

  1. Offer to take the property “as is.” Make sure you don’t forfeit the right to an inspection, and always include the option to terminate. The idea is to communicate that your buyer is comfortable with the condition of the home and won’t ask for any repairs. However, if you complete the inspection and there are too may red flags, you retain the right to terminate without penalty.

  2. Offer to limit your inspection repair requests to health- and safety-related items only.

  3. Offer to limit your inspection repair requests to those items exceeding a predetermined amount. For example, $500 or $1,000 depending upon the situation and your clients comfort level.

4. Offer a post-close occupancy agreement

A post-close occupancy agreement or free rent back is another strategy to cater to the sellers. Make sure to ask the listing agent about the sellers’ plans. Have they found a replacement home? If not, offering the ability for the sellers to remain in the home post-close with free rent can be advantageous.

5. Waive the loan termination provision

Another great idea, one that takes some preplanning, especially if you are competing against cash, is to get your client pre-approved. Ask the lender if they are comfortable waiving the loan termination provision of the contract.

Make sure the lender understands that in the event they can’t deliver, they are willing to reimburse the earnest money. Get it in writing.

6. Consider the tried-and-trues

Offering hard earnest money, a quicker close, shorter deadlines and having great communication can all help you win a multiple-offer situation.

Be sure to stay away from buyer love letters. They are fraught with potential fair housing violations.

At the end of the day, our job as real estate agents is to have numerous options to help our clients succeed with their plans.

Source: Inman

Filed Under: CVAR Connect, Pro Tips Tagged With: appraisal, As Is, bidding war, cvarconnect, down payment, escalation clause, inspection, multiple offer

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