Outside of an urban market, multiple-offer situations are not a frequent occurrence… yet as inventory lessens and Sellers are dictating terms, even in our rural Vermont market we are seeing multiple offer scenarios more frequently – especially in the price range below $500,000.
When is it right to compete for a house?
Interestingly, Buyers are not always comfortable with ‘competing’. Their reasoning is typically in the realm of “I don’t want to get caught up in a messy/complicated situation…” or, “I will wait and see what happens, and if the house is still available, I will make an offer then…” or, “I won’t be able to go as high as others, so I probably won’t be the winning bid anyway…”
But these are not winning strategies. If there is a multiple offer situation, the property is going ‘under contract’ – there will be no second chance. And there is nothing messy or complicated about a multiple-offer scenario if you are working with the right Broker.
The only determining factor about whether or not a Buyer can compete is how much they are willing/able to pay, and how much they are willing to give up to make their offer the most attractive on terms other than price; for example, are they willing to forego heating system, chimney or septic inspections? There is risk associated with this, but if the structure and infrastructure are relatively new – is the risk manageable?
It doesn’t cost a buyer anything financially to compete, but it does take some time and energy.
Make sure you and your Broker know your budget
The thought process should include consideration about what number/price Buyers would regret having lost the property. This should be balanced with the intended budget. Although they may qualify for financing, will the Buyer end up asset poor carrying the property at that price? While it is all very exciting in the beginning, the shine will wear off, and you are left with carrying costs that are very real from month to month in addition to ongoing maintenance.
This top number should be discussed with a Broker in terms of ‘over-paying’. Are they over-paying, and if so by how much? Does the Buyer’s intended time of holding the property, in the current market cycle, offer enough time to recoup an over-payment? Are there major maintenance projects looming in the near future – for example a new roof or new heating system?
If, after consideration of these items, it still seems like a good idea, then go for it – there is nothing to lose!
Do you have questions about engaging in a competing offer situation? Let us know!
Thanks for stopping by,
Sharon
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