Learn How to Beat Competing Offers In a Hot Real Estate Market
In a seller’s market prepared buyers move quickly to win the deal!
If you’re an HGTV fan then you have probably seen a few circumstances where the buyers were in a multiple offer situation. Possibly, you’ve experienced it yourself. Today more than ever, homes are flying off the market! In the past I would typically share with my clients how the good properties sell quickly, and recommend they not hesitate on making an offer. Now it seems all of the homes are selling quickly!
You can’t be passive. If you’re serious about buying, there are things you need to do right away. Put a strategy in place so when you walk in a home that screams, “I’m the one,” you will be ready to pull the trigger.
What’s happening you may ask, why are the homes selling so fast? It is called a seller’s market?
A seller’s market occurs when there are more buyers than available homes for sale. The old economic law of supply and demand comes into play. When this happens sellers have an advantage over buyers in they can hold out for the price they want, and then some.
Supply and demand are the strongest factors favoring owners in a seller’s market.
A low supply drives up prices. Many sellers, primarily unmotivated sellers, are firm on their list prices. Sellers who have the home price right will get multiple offers. Bidding wars ensue, and their homes sell fast, often above the appraised value.
Many sellers are learning that a low appraisal from their buyer’s lender will not necessarily kill their deals; more and more buyers are paying above the appraised value. Sellers are finding cash buyers willing to pay their price. A majority of these cash buyers are foreign investors, downsizing baby-boomers and empty nesters.
When mortgage interest rates are low, then historically buyer demand is high. Relaxed lending standards from both Fannie Mae and FHA make buying more attractive. Renters are facing higher rents, and the math shows the low-interest rates have made ownership more affordable than renting.
If You Want to Win the Deal, Try These Strategies

Use these winning strategies before you find yourself in a multiple offer situation.
- Make sure you are pre-approved with a reputable lender. This means they’ve verified income, reviewed bank statements and other loan documents, pulled credit, reviewed tax returns etc… This will give your offer more credibility.
- Work with a skilled real estate agent who has experience with multiple offers. People who work with a skilled real estate agent are 80% more likely to win their bids.
- Try this tactic-get pre-approved with the listing agent’s preferred lender. Here’s what happened with one of my clients: A young couple I was working with, first time home buyers, found a house they LOVED! There were six offers on the table when we looked at the home. I asked the listing agent if although my client was already fully approved with a reputable lender, would it help my buyer’s offer if they were pre-approved through her preferred lender? Stunned, she said it couldn’t hurt. So, we quickly met with the loan officer, it was even over the weekend, and got my client approved with the listing agent’s lender of choice. Impressed by the motivation of my client, the listing agent influenced her seller and they accepted the bid. Needless to say my clients were thrilled!
- Look at the market data specific to the area of the home you want to make an offer on. When reviewing the numbers don’t fall victim to averaging prices and not comparing apples to apples when determining value.
- Put up as much earnest money as possible. This is important to sellers and shows you are serious about staying in the game once under contract.
- Work with your real estate agent on presenting the strongest terms possible. You can win the deal on terms sometimes over price. Terms such as closing date, inspections dates, lender financing terms, or earnest money deposit. If you’re getting a loan and putting a significant amount down, this makes sellers feel more confident in you as a buyer.
- Find out how many other offers are on the table. When it’s just you and another party you might not have to go head to head so hard. But, when there are 10 or more then someone is likely to come in high over the list price.
- If you love the home and want to be in a backup position, write that in the offer upfront. State in the terms of the backup contingency that if the first offer terminates, you have a binding contract on the terms of your backup offer. The seller does not get to reopen the bidding war. I’ve seen this tactic impress sellers and the listing agent to the point of accepting my client’s initial offer based on the high motivation it shows from the buyer!
- Make it personal with the seller -Real estate is a personal business whether we like it or not. I’ve recommended to clients in the past to write a letter to the seller and share with them what it is they love and appreciate in the home. Most sellers want to know their home will be in good hands. It’s personal. This has turned the tide many times for my clients, and relationships have even resulted from it.
Realize in a seller’s market the list price vs sales price ratios are low
People get stuck in their thinking about pricing real estate in a seller’s market. Buyers sometimes think they will never pay the actual list price on the home and still insist on coming in low, or lower than they should. They think it’s like paying sticker price for a car! It’s just not something that’s done. If you hold onto this mindset you will become worn out making offers and losing bids, forever beaten out by other buyers.
In most areas when it is a seller’s market the list price to sale price ratio is low, around 2% to 3% of the sales price. And, as I stated earlier, many homes sold in a seller’s market sell for higher than the actual listing price.
Know Your Needs vs. Wants
When inventory is low and home buyers have fewer homes to select from, a compromise on certain amenities is in order. Decide ahead of time what you will compromise on. Make a list of your top 2 amenities and realize everything else you might have to compromise some.
Understand homes in good condition and priced well sell fast
Homes that are priced right, show well, and have everything going for them will sell at rapid-fire rate! So if you find something you like then make your move. Don’t think you can sleep on it, or wait over the weekend and gather up all your family members for a third showing and expect the property will be there waiting for you.
So good luck, and get out there with a strategy in hand, confident you are prepared and ready for the real estate game!
