Steps to buying a house -5 tips for mulitiple offers

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This week we've got the next installment in the series on steps to buying a house
with five tips on how to win in a multiple offer situation and we're
starting right now. Hey everyone welcome back to my channel my name is Harry
Moore and I'm a realtor in the Washington DC metro area and I post new
videos every week all about things real estate in the DMV. So you've been
watching the new listings like a hawk and something that looks great pops up.
You rush out to see it and most of your bullet points are right there remember
there's no perfect house but if you can get one that hits 80% or 90% of your
list you're doing really well. You talk to your agent, you look at the
comparables and you decide that you want to make an offer. Since it's a
great-looking house, well priced and fresh on the market you may find
yourself in a multiple offer situation. If you're watching this video in the DC
metro area the contract packets can vary from twenty-five to fifty pages long
depending on the jurisdiction and the type of property. But don't worry I'm not
gonna go through all of that stuff with you. I don't want you to run away. This is
just a brief outline of some of the options you have available to you, but
you decide which ones do or don't work for you. Everyone has their own level of
tolerance for risk and each buyer's financial situation is different. Some
people just don't want to be in a multiple offer situation period and
that's totally understandable. If so then you may need to reconsider
the slice of the real estate market that you're looking at. I have a video I'll
post the link up here somewhere about how to put together your market search.
Have a talk with your agent and maybe you need to recalibrate your search.
All of that being said let's look at some key items that you need to think
about when you're writing an offer that may be competing. First tip, begin with
your best offer. Realize that you are trying to get the opportunity to be the
new owner and you may only get one chance.
Buyers sometimes say to me well the seller can always come back to us and
that's true they ca,n but if they have more than one
offer to choose from they probably won't. Tip number two use an escalation clause...
carefully. I may actually do a whole separate video on escalation clauses if
that's something that you'd like just let me know in the comments and I'll put
one together. First thing is your agent will want to
confirm verbally with the listing agent that there actually are other offers
before you submit your offer with an escalation clause. The way I usually
process the whole offer is I go through everything with the buyers, fill it all
out including the escalation clause and then put the escalation clause aside as
a separate document. Then it can be added when the offer sent over depending
on if there are competing offers or not, the buyer has the choice. There are two
key terms to be decided within the escalation clause, one is the increment
or the step and the other is the cap or the maximum value. Let's talk about
increments first generally increments of one percent of the sales price are a
good baseline but that can vary depends on the price range of the property, how
many competing offers there are, and how badly the buyer wants the house as well as lots of
other variables. The other part of the escalation Clause is the cap and the way
that I try to help people with that is I ask them this question-- If someone else
is willing to pay a thousand dollars more than your cap
for the house then you should be able to say they can have it, and
you'll be content to walk away without second-guessing yourself if that happens.
Number three remove or modify the appraisal language.
The first thing to know about this is that the buyer has to have some extra
cash if necessary if you don't then this one's not for you. There are two ways
that I have helped people use this in the past the first would be to cap your
liability if the appraisal language is modified. What this means is if the
appraisal were to come back low then you say that you would be willing to
contribute money to make up that shortfall up to a predetermined maximum.
That's a way of sort of sharing the risk with the seller. The second way would be
for you to ins assume the entire potential risk if the appraisal were to
come back low. If you're an educated buyer and have reviewed the comparables
well you should have a pretty good idea about the fair market value of the
property, so you can decide if that's a risk that you feel comfortable with. This
is really something that I only suggest for buyers that have substantial extra
cash reserves and the stomach for it!
Number four--Write a generous earnest money deposit and make sure that it can
be deposited immediately. That means you'll have to have the funds available
in the checking account or to be able to transfer them quickly into that account.
A big earnest money deposit shows the seller that you're serious about moving
forward with your offer. I've seen competing offers that were virtually
identical, where the seller really couldn't figure out any
other way to pick other than one had a higher earnest money check than the
other. The earnest money amount depends on a lot of different things;
what sort of financing you're getting, how much you're putting down and
the jurisdiction.
Number four write a generous earnest money deposit the earnest money is the
cheque that goes with the offer and is deposited once your offer is accepted
when you write the earnest money check you should have the funds either in the
checking account or somewhere they can be transferred instantly once the offer
is accepted a big earnest money amount shows the seller that you are serious
about moving forward if your offer is accepted I've seen competing offers on
the table that I'd been through with the sellers over and over again where they
were virtually identical there really was hardly any way to distinguish them
and the seller said I'll take this one because the earnest money check is
bigger the amount of the earnest money that you're going to have to write
depends on the type of financing that you're getting and the jurisdiction that
you're in this is another time when a good agent can give you expert guidance
all right we're headed down the homestretch with number five a
pre-approval letter from a lender contingent only on appraisal and normal
underwriting guidelines another thing is that the loan amount should be in the
letter if at all possible if you've already been through full underwriting
as opposed to just desktop underwriting that's even better and the lender should
put it in the letter I also asked the loan officer to call the listing agent
before the offer is presented to the seller that way they can address any
questions and it shows that we're gonna be a good team to work with a strong
letter from a recognized lender is also very important these days I talked about
the importance of working with a recognized local lender in an earlier
video click here to watch that video if you're interested well that just about
wraps it up I am Harry Moore with Keller Williams Capital properties and I want
to say thank you for taking the time watch this video if you liked what you
saw please mash that like button happy thumbs are most appreciated also
if you want to see more videos about real estate in the DMV then subscribe
and ring that Bell so you'll be updated whenever new videos come out make it a
great day and I'll see you again soon

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Steps to buying a house -5 tips for mulitiple offers

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