In February, the market reported its lowest inventory in 13 years, and a year-over-year median sales price gain of 10 percent. With a shortage of homes for sale across Minnesota and western Wisconsin, prices are rising and buyers may find themselves in multiple offers this spring market.
Common wisdom says that the highest offer will win every time, but the reality of multiple offers is a bit more complex. Here are insights you can use if you enter multiple offers when buying a home this year.
Assess the market
Your REALTOR® will help you identify if multiple offers are common in the homes, neighborhoods and price point you want to buy. If you’re hoping to purchase in the city of Minneapolis or first-ring suburbs like Edina, St. Louis Park or Hopkins, it’s likely that you’ll need a multiple offers plan before you enter the market. Remember, real estate is all about location and local quality of life, so hiring a specialist who serves your desired area will be critical to making the right bid.
Go big to get home
While the highest bid isn’t the only consideration sellers make, you’re unlikely to get the sale if your offer is at the bottom of the heap. When making an initial offer on a home in high demand, your Realtor can help you make an offer that is slightly above the average home value for the neighborhood. Together, you can strategize on the benefits of offering your best offer out of the gate — meaning you would walk away if the home still hit multiple offers — or offering below your “ceiling” in order to have leverage once other bids come in.
VIDEO: Multiple offer tips for buyers
Nix the contingencies
In a market where buyers have the advantage, contingencies are common. Buyers may make an offer that is contingent on the sale of their own home or on a passed home inspection. When sellers have multiple offers to choose from, they are unlikely to look at offers that include such contingencies. Provided the home is free of major issues like a cracked foundation or a leaking roof, consider making a “clean offer.” This could be one way to appeal to a seller outside of having the best offer.
Put cash down
Another way to impress sellers is to prove you can pay a substantial amount of money at closing. If you can afford a down payment of roughly 10 to 20 percent, the seller and their agent may feel more comfortable with you than another buyer who has less to offer up front. We’ll work with your mortgage loan officer or your financial planner to ensure you’re making a strong but safe offer.
Offer better timing
One last way to stand out in multiple offers is to offer the seller a beneficial path to closing. If we know the homeowner is hoping to sell the home immediately, it would benefit you to offer a closing with a month or even a few weeks. If the seller is waiting on a new construction home that won’t be ready for 60 – 90 days, offer a delayed closing. When multiple bids are close, these types of generosities can make all the difference.
Ready to enter this hot market? We can discuss the frequency of multiple offers in your selected area, then determine your strategy for standing out no matter what your budget. Reach out today to get started.
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