Real Talk from Our Realtors®: Multiple Offers
by Marc Civitarese
It has been as season of multiple offers on every property.
Today was no exception. A charming bungalow just came on the market and my client wants to put in an offer. This has the makings to be an epic battle to get this one under contract. The property is in a very desirable town, close to Charlottesville and close to the town center. It sits on an acre with public water and sewer. This is unheard of in this area, and I know there is going to be a ton of interest. I call my client and I go over the details with her. She is pre-approved, which is great, but her current approval is contingent on her selling her current home. Having that contingency, unfortunately will put her at a big disadvantage in this market. She thinks she maybe able to get approved without selling her current home. Clock is ticking and we have a deadline to submit our offer. Time to get the lender on the line. We explain the situation to them, and they go back and look at the numbers.
The other challenge with this property is that there is a tenant in place until the summer. This makes financing the home as a primary residence tricky. Most, if not all, lenders want you take occupancy with in 60 days of closing. At this point we are more than 5 months out before the tenant’s lease is up. Given the fact the sellers put this on the market now, suggest they want to sell sooner rather than later. We decide the best route is to have my client buy this as an investment property so we can close as soon as possible. The lender works on this for us as well. Clock is still ticking…
Structuring the Offer
Fortunately, the lender was able to work with my client quickly on this. She was able to get approved without selling her current home and she was approved for an investment loan as well. Our position just improved tremendously. Now comes the hard part- What does my client offer? I do my research and the property is a bit underpriced, suggesting, they are hoping market pressure will drive the price up. My client, with my guidance, makes an initial offer 10K over asking with an escalation clause of another 15k. She decides to also buy the property as is. In addition, my client, has some flexibility and some cash on hand. This gives her the opportunity to add an appraisal differential clause which will cover a good portion of any difference between the final contract price and bank appraisal if that arises.
We now have all the terms sorted out, offer is written up and submitted. My client is positioned well, and we have constructed the best offer we can, with the parameters we must work with. Now, we wait.
How Many Offers?!
That afternoon, I receive an email from the listing agent. There were 56 viewings and 19 offers! Ours unfortunately was not accepted. All the offers were strong. My client was disappointed hers was not picked, but she was not disappointed in the offer that was submitted. She knew, I had helped her construct the best possible offer for her and was grateful for my hard work on her behalf. For me, at the end of the day, that is the most important thing.
On to the next!