Austin’s housing inventory is selling faster than the boom period of 2007. In June 2012, Austin had a 4.4 month supply of homes available for sale. Today (March 2016), at the current rate of sale Austin has only a 1.8 month supply. The surge in sales coupled with resurgent demand has re-introduced the phrase “multiple offers” into the conversation of buyers and sellers for the fourth year in a row. Clearly, Austin’s real estate market is by anyone’s definition an extreme “seller’s market.” Here’s how to succeed with multiple offers in Austin.
How Can a Buyer Win in a Multiple Offer Situation?
With that kind of competition what does a buyer do to stand out from the crowd and become the successful bidder? Certainly follow the basics: Submit your highest and best offer with only critical contingencies included and short time frames while keeping your repair demands to a minimum. Here are some additional strategies to help make your offer stand out from the crowd.
Write a Personal Note
One of the most successful tactics is to write a personal note to the sellers and include a photograph of your family (include the pets). Pictures of infants are powerful emotion grabbers and emotion can work in your favor. All other things being equal, a seller’s positive impression of you can swing the deal. Years ago, when I was young and dumb, I dismissed the note and photo idea. But I learned and learned well. It works far more often than anyone might think.
Create an Emotional Bond
Try to create an emotional bond between you and the sellers. Point out the commonalities, school allegiances, hobbies, and especially share your reasons for wanting to buy the house. Many times the seller purchased the property for similar reasons and that shared appeal makes the sale. The people side of a transaction is often the difference between success and another weekend of house hunting.
Offer to Pay for Customary Seller Closing Costs
Customarily, seller’s pay for the owner’s title policy (which is usually around a few thousand dollars based on the price of the home) and give buyer’s a credit for the home warranty (usually $350-$550 depending on coverage). Buyers who offer to cover more of the seller’s closing costs means a higher net number to the seller, which makes your offer more favorable.
Ask the Seller if They Need a Leaseback or Specific Closing Date
Sometimes sellers aren’t prepared to move right away. They might need to find a house, wait for a house to be built or have an extra few days after closing to move. Or, they might have a specific date in mind that would prevent them from moving twice. The buyer that gives them that flexibility, might look more favorable.
Ask if They Have Set an Offer Date or are Looking at Offers as They Come In?
You’ll want to make sure you submit your offer by the seller’s deadline if they have one. Though the seller’s agents should post this info online, they don’t always do so. Have your agent ask the seller’s agent so you know how they will handle offers. If they haven’t set an offer date, get your offer in as soon as possible. If they get another offer they like while you are waiting to decide, they might take it and you lose out. If they have set a deadline, make sure you get your offer in by that time at the latest, preferably with a few hours to spare to give the agent a chance to review it.
Shorten Contingencies as Much as You Can
Opt for the shortest option and financing contingency period you can realistically complete all necessary tasks. The option is when you’ll do your inspections. Make sure you have enough time to get a reputable inspector out and time to ask for repairs. We don’t want to make it so short that we will have to ask for an extension, but we don’t want to ask for more days then we need. Work with your agent and your lender to come up with reasonable, but aggressive time periods. A seller will look more favorably on a buyer who is ready to get the process started and completed quickly.
Work with a Great Lender Who is Available
In this market, homes are usually listed on a Thursday or Friday and sellers accept offers at the end of the day on Sunday. If you work with a lender who is not available on the weekend, you won’t be able to get a pre-approval letter until Monday, which puts you at a disadvantage. If the sellers review offers on Sunday night and cannot verify your credit worthiness until Monday morning, they might decide to accept another offer who submitted a complete package at the time they asked for it. Don’t let your efforts go to waste by working with a lender who is only available during business hours.
Work with a Great Buyer’s Agent Who is Available
It is important the buyer’s agent you hire is available to show you homes on short notice. You won’t always get the chance to wait until the weekend or next week when the agent is available. We are a team of 3, so there are very few times when all of us are booked at the same time. A great buyer’s agent also knows how to write and present great offers so yours stands out from the pack.
Most Importantly Submit Your Highest and Best Offer
The most important thing to remember is submit your highest and best offer first. Often times, you’ll only get one chance. If you’re willing to pay more, you might want to consider improving your offer. What we usually say is make an offer that if you lost out, you would feel confident you made your best effort. Don’t assume you will get a second chance to come back with more money. Once the seller accepts another offer, you will only be able to submit a backup.
Ask if You Can Submit a Backup Offer
Not the successful bidder? Ask if you can be in backup position. It doesn’t happen often, but sometimes the successful bidder has cold feet or changes their mind. They are often expected to make an almost instantaneous decision whether or not to buy the property and sometimes they wake up the next day and decide it is not the house for them. If you are in backup position, you won’t have to go through the multiple offer process again. When the first buyer backs out, you are the primary contract. Not all sellers will accept a backup, but it’s worth it to ask.
Remember There Will Be Other Houses
This is probably the hardest for buyers to understand, especially if they have submitted several offers and are emotionally drained. It can be a frustrating process, but you always want to remember the next house might come up tomorrow. It is completely understandable to be upset and sometimes buyers even need to take a break. 100% of our clients who are looking find a house eventually. And, almost every time, the buyers tell me they are glad they ended up with the property they ultimately got. Stay positive, don’t give up and you, too can be a homeowner in this competitive market!
Not Interested in Multiple Offers?
There are still some areas of Austin that aren’t in extreme seller’s markets. These neighborhoods you have a bit more time to make a decision. Call us at (512) 827-8323 or email us at info@11OaksRealty.com to schedule a time to discuss this type of strategy.
Need Help Buying in a Seller’s Market?
We’ve helped buyers successfully buy homes in sellers markets for years, some of which that are much more competitive than the one we are in now. We know how to present offers that get accepted and are available to act quickly in a competitive market. Check out our Austin Home Buyer Representation Program for more info about who we are and how we work. Then, call us at (512) 827-8323 or email us at info@11OaksRealty.com to schedule a no obligation consultation.