Multiple offers are back in spades in Long Beach, Lakewood, Signal Hill, and surrounding communities. As inventory has declined and demand has soared, multiple offers have become more and more common. Recently, almost every buyer we’ve written an offer for has run into multiple counteroffers. There’s no denying that we are in a seller’s market. Sellers are in the driver’s seat right now, so as a buyer, it can be harder to get your offer accepted.
For some background on how multiple offers work, please watch the video below. To read our tips for getting your offer accepted when there are multiple offers, keep scrolling.
For more videos like the one above, please CLICK HERE.
1. Become familiar with comparable sales and expect to pay market value
Yes, there are still “deals” out there but in many neighborhoods of Long Beach. However, keep in mind that the average sales price is more than 100% of the list price. It’s becoming more common to see homes selling for above the asking price. That can be because the seller priced the home below market value to create a bidding war. Or, simply because intense buyer interest drove the price above what other homes have been selling for. We’re in an “appreciating market” and prices are going up. In order to get your offer accepted, you’ll need to structure it accordingly.
2. Get pre-approved (NOT prequalified) with a reputable lender
Pre-approval requires submitting bank statements, tax returns, and paycheck stubs. It means more work, but it’s far more powerful to have that than a simple pre-qualification. Most sellers will not even look at your offer without a pre-approval. Furthermore, prospective buyers can’t even view most homes in person without a pre-approval. This is due to the pandemic and keeping buyers and sellers safe.
Also, know that you may have to get cross-qualified or cross-approved with another lender (of the seller’s choice or listing agent’s choice) before your offer is considered seriously. Keep your paperwork handy in case you need to do this and don’t take it personally. The seller and listing agent don’t know you or your lender. So they simply want a second opinion from someone they know and trust. This is one way they can determine the relative strength of offers that are similar. If you are working with a local lender who has a strong reputation and relationships with local Realtors this may lessen the chances that you’ll be asked to cross-qualify.
3. Don’t ask for a credit for closing costs
You may be competing against other buyers who don’t need any credits. So all other things being equal, the sellers would probably prefer accepting that offer if the bottom line is the same as yours. Take an example of a $450,000 sales price. Buyers who need a $12,000 credit for closing costs are effectively offering the sellers $438,000. Even if they offer $462,000 to compensate for the closing cost credit, the net to the seller would be less than for a straight $450,000 offer because the seller will pay a slightly higher commission, tax stamps, escrow, and title fees. Plus, the property would now need to appraise at a higher value. If you need a credit for closing costs, consider seeing if your lender can structure your loan with a lender credit. Another option is to explore whether a family member is able to “gift” you funds.
4. Bump up the earnest money if you can
When making an offer, buyers offer an “earnest money” or “good faith deposit.” If it’s too low, the seller may not consider that it shows much “good faith.” Before accepting an offer, sellers like to see that buyers have “skin in the game.” Good faith deposits are typically 1 to 3 percent of the sales price.
5. Time is of the essence
If you like a home, act quickly. Chances are other buyers are interested as well. If you feel comfortable shortening your contingency periods, do so. Sellers like to know that there’s a shorter period of uncertainty before you’re committed to moving forward.
6. Find out what’s important to the sellers
Yes, price is important and most sellers want to get the highest one. However, buyers often lose out on offers that are at the same price as theirs because of other terms. Have your agent explore what is important to the sellers. What timing are they looking for? Do they need to rent back the home temporarily after escrow closes? What appliances do they plan to include or exclude? Will they agree to provide termite clearance or a home warranty? The closer your offer is to something the seller can accept, the better it will be received.
7. Consider writing a love letter
This isn’t always appropriate, but it can sometimes make the difference. Again, have your agent explore with the listing agent whether the sellers are emotionally attached to the home. It’s possible that the buyers care “who” buys the home, not just “how much” they will get. If you do write a letter, it should be from the heart. Tell a little about yourself and why you like the home.
8. Consider adding an “escalation clause” or removing or shortening contingencies
Escalation clauses state that a buyer will pay up to a certain amount above the highest verified offer received by the seller. You can place a cap on the price you’re willing to go to, and you can adjust the amount above another offer you’re willing to pay. The choice depends on how competitive you want to be.
In such a tough market, buyers may want to consider shortening or even waiving contingencies. The standard contingencies are inspection, loan, and appraisal. However, many buyers are opting to shorten the standard time frames for contingencies or waive appraisal or loan contingencies altogether. This can be a good option if buyers are either paying cash or confident about their ability to obtain a loan.
9. Work with a local, reputable agent with community connections
If you find that your agent is abrasive or poor at following up and following through, other agents may share your opinion. Realtors like to work with other agents they know are experienced and capable. If your real estate agent has strong community connections, this may give you an edge. It doesn’t mean you’ll get your offer accepted automatically, but everything helps!
The Shannon Jones Team has been working in Long Beach for over 20 years. We have developed a positive working relationship with many local agents. This can benefit our clients, particularly if we’re competing against an offer submitted by an inexperienced or out-of-area agent. These relationships also mean that we sometimes find out about properties before they hit the Multiple Listing Service.
10. Keep trying
Just because you lost out on one house doesn’t mean the next offer won’t work. Keep looking and writing offers and stay positive.
Need Help Getting Your Offer Accepted?
Here at The Shannon Jones Team we understand that this can be a frustrating time for buyers. Not getting an offer accepted is always hard. However, getting multiple offers rejected is even harder. If this is the case for you, it may be time to look at a different strategy. Our team would be happy to set up a complimentary appointment to discuss the homebuying journey. To get started, simply fill out the form below or call 562.896.2456.