If you have any doubts about the health of the real estate market in Austin take a look at the article, "Multiple Offers Make a Comeback" by Autumn Rhea Carpenter in the September/October issue of Austin Realtor. The piece includes the story of one realtor whose clients submitted an offer on a house only to be faced with stiff competition -- 12 offers on the same property in 24 hours! If you get in a situation like that on a property you really want, is how do you make yourself stand out?
The most important thing is to illustrate that you're serious about showing up for the closing. You're there to do business and you're interested in making that happen. First and foremost, make sure all realtors concerned are really communicating. Buyer's and seller's agents who are really talking get the "feel" of the deal. Any kind of personalization helps, even just an understanding of why you want to buy the property may nudge the other side.
Never underestimate the degree to which money talks. If you're trying to get noticed in the crowd as a truly viable buyer, a bigger amount of earnest and option money will speak volumes. The "norm" for good faith money is 1% of the sales price. Bump it up to 2-5%.
While contingency clauses are in place to protect the party making the stipulation, they can really slow down a deal. Let's use a standard one you see over and over, "I'll buy this house IF my other house sells." The more of the "ifs" you remove from the equation, the more attractive your offer is going to seem, but be sure you're working with a well-informed, knowledgeable agent who can advise you of all the associated risks before you decide to remove those protections from the negotiating table.
Get pre-approved for the loan. Not pre-qualified, but pre-approved.This means the lender has done the due diligence and all that's required to seal the deal is for the property to qualify for the loan, meaning it must appraise. You have the money. There's no financing contingency to complicate the transaction. Pre-approval really "greases" the acceptance equation and takes away one more hurdle to a "done deal." All that being said, don't just assume you'll get the property if you have the cash. Pay attention to the deal and be a responsive and flexible buyer.
All multiple offer deals are stressful. The seller is going to be overwhelmed trying to make the best choice, wondering if the property was priced correctly, and anxious that they do the "right" thing. You're going to be anxious about making the purchase and moving forward with however ownership fits into your broader business plans. As investors, we're always thinking a couple of miles down the road, which may mean we trip on what's right in front of us.
In multiple offer situations, everyone needs to breathe. In the end, you have to recognize your limits as does the seller. Sooner or later they have to stop taking offers and sooner or later you'll have to say, "That's the best I can do." Resign yourself to the fact that you will have to walk away from some properties simply because there are things beyond your control.
There will be another property, and the best news I took away from the article that started this discussion is that we do have a seller's market in Austin now. As investors, that means when we do decide to move a property we own, we're going to get the appreciated return on our investment. That's what I meant about looking a couple of miles down the road. As investors, we're buyers and sellers. At any given time, one side of the coin or the other may be brighter, but you can bet there is plenty of coin in the game.
Posted by Monte Davis on