When there is strong demand for a property it’s not unusual for buyers to have to compete against other buyers for a property. In such a case, just what can you do to strengthen your offer? And what important factors do you need to bear in mind?
Let’s start with the concept of multiple offers. It’s the estate agents job to market a property and attract as much interest from qualified buyers as possible. If a property is correctly priced and the marketing is strong, then buyers will respond and indicate their desire to make a written offer.
The estate agent needs to act in a professional and transparent way so to all interested parties. A “horse-trading” scenario will need to be avoided – and all offers would need to be handled in a confidential manner. It’s not uncommon for the agent, with the consent of the seller, to put the property into a “For Sale By Tender” situation.
In a case like this, all interested buyers are asked to make offers by a certain date, and to leave the offers open for a specified time – perhaps 2 or 3 days. The seller then looks at all the offers and accepts the best one. Alternatively, the estate agent would just disclose that there are other competing offers and then the buyers make their best offer.
As a buyer, always ask if there are other competing written offers. When competing you will only have one chance to make your very best offer – so don’t waste that chance!
When making your best offer there are 3 aspects to consider: The price you offer, the terms of the offer, and the timing of the offer. All 3 aspects will have value to the seller. Naturally, the price you offer is important – so once you have worked out what you can afford, taking into account the finance you qualify for any cash you have, then offer your maximum.
Next, look at the terms of your offer. Can you pay a large deposit? What is the lowest loan-to-value bond you could take? An offer subject to a 70% bond is much stronger than an offer subject to a 100% bond. Can you remove any special conditions? Can you pay a higher occupational rental? All of these factors have a bearing on the strength of your offer.
Lastly, consider the timing. Ask the agent what the sellers’ preference is on when they want to move out and give transfer. Where possible, try to fit in with the sellers timing. This will significantly strengthen your chances of success.
When competing for a property you may not get a chance to negotiate a counter-offer with a seller. So submit your absolute best offer and give the seller a day or 2 to consider it. Paying slightly over what you had intended will seem less relevant later when you consider the years of enjoyment in your dream home.
Principal, Harcourts Platinum