Competing against multiple offers is nothing new, but for inexperienced agents and new buyers it can be quite a challenge, especially as the competition heats up to snag some of Chicago’s most desirable listings. Multiple offers will continue to dominate the spring market especially in Chicago’s most desirable areas. Crain’s recently posted an article “Four things you might need to do to get that house.” While the article gave a few ideas, I thought I would give my own opinion on their suggestions and provide you with the advise I provide my clients when competing against multiple offers or when trying to get a property taken off the market before multiple offers can be submitted!
Let us pretend you’ve found the perfect home and you are seeing the property the first day it is on the market. Let us say that day is Tuesday. The agent informs you they are planning an open house for the weekend and expect to wait until then to review all offers. This is not just a sales tactic, but it is now becoming more common place in Chicago. So if this is your scenario, what can you do?
Price: Don’t BS on the price. Have your agent evaluate comps in the area to make sure the asking price is fair. When you submit your offer you better be submitting at list price OR HIGHER! Have your agent guide you so you don’t overpay for the property.
Earnest Money: Earnest Money is typically turned over in two stages: Initial stage, when the offer is accepted and the final stage, once inspection and attorney review are complete. INCREASE YOUR EARNEST MONEY! A greater amount of initial earnest money and a greater amount of final earnest money shows you are serious and have confidence in your current financial situation and in the property as a whole.
Shorten Attorney Review and Inspection Periods: The Inspection and Attorney review period can range anywhere from 5 to 10 business days or whatever the buyer and seller agree upon. Shorten these days if you can. 5 Days at the absolute most if you are in a multiple offer situation or trying to snag the property off the market.
Quick Deadline: If your offer is strong with the above points then put the nail in the coffin and don’t allow them to wait until the weekend. Give a 12hour deadline in your offer. Tell them its a take it or leave it situation.
Other items to consider:
Flexible Closing Date: Many sellers want a quick close date, but some may want some flexibility so give them that in your offer. Offer to close quickly but mention you can extend the closing if needed. You never know the seller’s situation…they may need more time to find their next home.
Quick Mortgage Contingency: If you have a mortgage contingency in your contract, end it is as soon as possible. The quicker you can get a clear to close the quicker the contract “goes hard” and is ready to close. Move up your mortgage contingency date (Commitment Date) to the soonest date your lender says is possible.
Escalation Clause: This is one of my favorites. This is a very simplistic way of explaining it, but the clause is quite simple….”Our Highest & Best offer is $2,000 above the price of any other offer you receive up to $500,000 with proof of other offer.” It is called an escalation clause because as other offers come in your price escalates up to a certain point. If you ever bid for things on eBay you may remember there are similar systems in place on that auction site that allow you to do something similar.
Paul Blackburn is an Illinois licensed realtor and broker with @properties in Chicago. For information about buying or selling in Chicago he can be reached at Paul@PKBlackburn.com