How to Win a Multiple Offer Scenario
WHAT A BUYER NEEDS TO KNOW IN ORDER TO MAKE THEIR OFFER THE MOST ATTRACTIVE!
In the current competitive property market 90% of on market properties will result in a multiple offer situation.
This can often be intimidating for buyers, due to their inexperience in the process, as well as the lack of transparency in a multiple offer situation; often leaving buyers feeling disconnected from the process.
Disengaging from a property due to a multiple offer situation is a common mistake that potential buyers make, as they assume that they won’t be able to secure the property due to the amount of interest in the market.
At Hot Property, we believe that if you don’t have your hat in the ring you’ve got no chance at all, so putting an offer in with a chance of securing the property is well worth the effort.
To increase the likelihood of success in the current property, Our team of investment buyer agents and home buyer agents put together their top tips!
1) FINANCE
Pre Approval is critical prior to searching, inspecting and putting offers on a property – in fact it is likely you won’t be considered without formal pre approval.
There are several parts to a Queensland finance clause that a seller will review in order to make a decision as to whether your offer is something that they would like to investigate and pursue further.
Another important factor of a finance clause is the duration of a finance clause. At Hot Property, we recommended having a 10 business days period in order to secure finance, especially if there is preapproval in place.
In this highly competitive market, you may need to seek alternatives when it comes to finance.
Some finance pre approvals can be converted to an unconditional approval within five business days of a contract date, which greatly improves the likelihood of success for a house purchase.
It is also possible to remove the finance clause altogether if a potential buyer has confidence around the purchase price and pre approval for a future home This is similar to bidding at auction where finance is not applicable.
Having a finance clause over two or three weeks or longer really does reduce the likelihood of your offer being accepted in this market.
2) DEPOSIT AMOUNT
The total deposit amount has become critical in this current buying environment.
In Queensland, sellers are able to accept up to 10% of the contract price as a deposit.
At Hot Property, we recommend that if you are in a financial position to put the full 10% deposit down on a property, then you should as this will strengthen your property purchasing power in the eyes of the seller.
If a seller was presented with two different offers, which one is more attractive:
OFFER ONE
10 business day finance clause
$1,000 deposit
OFFER TWO
No finance clause
A full $50,000 deposit that perhaps is equal to around 10% of the purchase value
Which offer are you going to have more confidence in if those two situations were presented to you – it’s a pretty easy answer!
In Queensland, if a buyer was to withdraw from the contract under building and pest or finance, and if those clauses are applicable to your contract, they are not penalised.
In other words, a potential buyer will receive that full 10% deposit back, refunded upon contract termination!
So, don’t be afraid to put a solid amount down as your deposit, especially if you have the protection of those terms and conditions available to you.
3) BUILDING AND PEST INSPECTION
A building and pest clause usually allows a week or five business days.
The market is seeing more and more vendors provide a building and pest to buyers in order to appear transparent and give them the ability to try and remove a finance clause in order to minimise the uncertainty that can arise for the seller during the buying process.
Be cautious with accepting a vendor’s building and pest inspection as there is potential for them to cut corners during the inspection process, so we recommend looking at them on a case by case basis .
However, it is important to note that it can disadvantage you in a multiple offer situation if the vendor is supplying a building and pest inspection, yet you are still insisting on obtaining your own external report!
4) SETTLEMENT PERIOD
The settlement period in Queensland is usually 30 days. However, in this environment, where sellers are struggling to find and secure the next property, a slightly longer settlement or perhaps even the opportunity to rent the property back might get you over the edge when it comes to success in a multiple offer situation.
Flexibility in relation to settlement is a valuable tool throughout negotiations. Offering the vendors a range, for example 30 to 60 days for settlement, and simply allowing them to nominate what date or time period within that 30 to 60 day period they would like to accept has proven successful for us in securing a property.
5) PRICE
Price is often the single biggest motivator to a vendor as to which offer they accept, so it’s important to get the price right.
We recommend that buyers block out external pressures when pricing their property, do your own homework and due diligence and ensure that you’re in tune with the current market.
It is important not to rely on old sales data in Brisbane right now – any sales longer than six months ago are completely irrelevant and any sales older than three months need to be heavily scrutinised in order to ensure that they are still relatable to the current market environment.
We strongly suggest that buyers contact agents who have recently sold properties, or agents that have property sales under contract to try and explore some of the most recent sale data.
Using automated valuation tools should not be relied on as they are not in tune with the current market.
Navigating a multiple offer situation is just one piece of the property purchasing puzzle. Having the confidence to undertake these strategies can be daunting for many buyers, and that is where Hot Property Buyers Agency comes in!
Having our team of expert Buyers Agents on your side can increase your competitive edge in a multi offer situation by supporting you in the implementation of the strategies mentioned above.
Get in touch with us online today or call us on 07 3170 3760 to get started! to discuss your property purchase today!