Winning the multiple offer battle
The Otago property market has been and remains, very active and there are less homes and numerous buyers with few homes to choose from. In most cases, homes for sale attract many keen buyers if they are marketed properly. We are therefore seeing many multiple offer situations where several offers come in from buyers wishing to purchase the same property. Naturally, only one buyer can purchase the property and so if you as the buyer really want that house, then we thought a few pointers on winning the multiple offer battle were very appropriate for this market.
MULTIPLE OFFERS – HOW TO WIN THE BATTLE
Multiple offers are the hardest situation a real estate consultant has to deal with. Why? Because there are invariably some buyers who are disappointed by the outcome and indeed suspicious of the process. The latter is an important issue as often the multiple offer situation is poorly handled by the industry as a whole. This can be because the process is poorly explained or the process is not followed correctly. A multiple offer situation arises when more than one party wishes to buy a property. As soon as a consultant realizes this situation exists, he or she will, once one offer has been submitted on paper, advise the second or subsequent buyers that they will be involved in a multiple offer. This means that their offer will be presented to the seller at the same time, in a sealed envelope and their offer will remain confidential to themselves and the consultant drafting the offer. If this is the buyers dream home, then the process is naturally very emotional and can make buyers very anxious.
What do you as a buyer need to consider in the process? If you are truly serious about winning the multiple offer battle, the offer you submit needs to be your best and highest offer possible. What does this mean? Well, it does not just mean submitting the highest price, although this is naturally very important, there are other facets of your offer that need attention.
Price: Your price offered must be as high as you can afford – whether subject to finance or builders inspection or whatever, it must be as high as you can afford. If the consultant rings the buyer back and say “Sorry, but the sellers have accepted another offer”, you need to be philosophical and able to say to yourself..”That’s ok, I offered as much as I possibly could and made my offer the best I could submit”. The real tragedy is if you could have spent another few thousand and you failed to offer it and so missed out on the property.
Deposit: The deposit is normally 10% of the price you offer. You have the option of offering more than this if you wish and this may swing the interest back to your offer compared to another party’s, especially if the seller is in need of cash to settle on another property or pay a deposit on another property.
Possession date: find out what the seller would really like with regard possession date. If you can oblige and meet their possession date, then you should. Otherwise, make it as close to this date as possible.
Conditions: If you can make your offer a 'Cash Offer', that is, 'unconditional', this is a major advantage – it means that if your offer is signed by the seller, the seller knows there and then, that they have sold their property to you.
Typical conditions which a buyer may need to include in their offer however are such requirements as a building report, title check by their solicitor, finance approval, a need to sell a house first before buying or other such requirements. If at all possible, and assuming you have time, you should get yourself into a ‘cash’ or unconditional position before drafting your offer. This may involve getting the consultant to send a copy of the title to your solicitor, or you the buyer sending it on and arranging a builder etc to check the property out before you submit an offer. Unfortunately, with multiple offers, the time frames are short and often the time to checking things out is simply not available. Never be reckless however, but have haste in your dealings to ensure you are as ready as you can be. If your offer needs to remain conditional, the price offered becomes even more important and arguably needs to be higher to appeal to the seller. Try to keep time frames to a minimum such that if your offer were accepted subject to a builders report for example, this clause confirms within as shorter time as possible.
All offers submitted, will be assessed on the offered price and the number and severity of the conditions within. Therefore it is important to limit the conditions as much as you can and part of the consultant’s job is to advise you on how best to do this.
GOOD LUCK If you are involved in a multiple offer situation, congratulate yourself on being able to recognize a good property. If you think about what is happening here, the other buyers are also recognizing the appeal of the property – that’s why they are entering the battle. If the property was unappealing or too expensive, and had sat on the market for weeks unsold, it is unlikely you will find yourself in a multiple offer situation. So good luck and if ever you need any free advice, even if buying a property through another company, one of our consultants will be happy to help you.