Submitting a competitive offer in a HOT market

16 Replies

Ok, so we have not had much luck submitting offers on houses listed on the MLS. I’m having a hard time adjusting to this competitive market we are in and would like some insight as to how to structure our offers to get accepted. I used to be an agent years ago, so I know some of the techniques, but it sounds like the game has changed. All cash? Pre-inspections? Let me know some strategies to get these offers accepted! Thanks!

In very competitive markets, I found out you have to be super quick.

Good properties and bargains don't last very long. They can go on the same day they are listed.

Some of the techniques:

- So again, ... act very quickly.

- Putting down a large deposit shows your commitment. 

- Reach out to the listing agent directly (if you are not using a an agent to source your properties), they have more incentives to close quickly and with you if they know they would be getting all of the commission.

- If you are going to get a mortgage, make sure you have pre-approval letter ready to send out with your offers and commit to close quickly.

- Going all cash and showing you have proof of funds to close quickly helps.

i am sure there are others but these are the tips i can think of very quickly off the top of my head.

@Carly Snapp My son just recently closed on a home in Seattle ...on just his 3rd try!  He looked at the home the day it listed, had inspections done the following day, He was preapproved for a quick-close loan, THEN made his offer with a $5k escalation clause up to his top allowable price accompanied by a 5% non-refundable earnest money upon approval -with no contingencies.  He only paid $106k over ask.  With a few improvements and 2 months he already has equity! 

You have to be prepared and decisive, fully ready to act. 

Good luck! 

Originally posted by @Curtis Bidwell :

@Carly Snapp My son just recently closed on a home in Seattle ...on just his 3rd try!  He looked at the home the day it listed, had inspections done the following day, He was preapproved for a quick-close loan, THEN made his offer with a $5k escalation clause up to his top allowable price accompanied by a 5% non-refundable earnest money upon approval -with no contingencies.  He only paid $106k over ask.  With a few improvements and 2 months he already has equity! 

You have to be prepared and decisive, fully ready to act. 

Good luck! 

Welcome to Seattle! :)

(206) 407-5452
Originally posted by @Carly Snapp :
Ok, so we have not had much luck submitting offers on houses listed on the MLS. I’m having a hard time adjusting to this competitive market we are in and would like some insight as to how to structure our offers to get accepted. I used to be an agent years ago, so I know some of the techniques, but it sounds like the game has changed. All cash? Pre-inspections? Let me know some strategies to get these offers accepted! Thanks!

 Competitive price, non-refundable earnest money, and quick close.

(206) 407-5452

Thanks, Patrice! Those are great guidelines! I’m realizing I’ve got to up my game to be competitive.

Curtis, that is just craziness, but I’m afraid Tacoma is showing signs of this type of crazy competitive market because Seattle investors are changing the way the real estate market is run. We local Tacomans have to keep up!

Thanks, Adrian! I’ve got to step it up, if it’s a house I don’t want to lose out on.

I've seen a couple recent deals in the area come together due to waiving inspection rights! Not ideal, but it might get the job done. Probably pairs well with a home warranty for those who go that route! 

most listing will set a  date to " review offers" ...try  getting a solid  offer with no contingencies to list agent / seller  BEFORE this date to be reviewed

In Tacoma if you're competing with other offers then you are going to need to waive inspection, be at or above list price, non-refundable earnest money and quick close. 

There are ways to negotiate for better options. But if you're buying rehab properties you are probably competing with other cash offers so that really doesn't make much of a difference. I hardly see good deals on the MLS anymore to be honest.

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The most important thing you can do, hire a top producing experienced agent that knows what they are doing.  Not only will they know how to structure the offer, they are likely to have a reputation for closing deals, and relationships with the other top agents.  I bet 20% of my deals every year get done because I have a relationship with the agent on the other side of the deal.

Be aggressive.  If it is a neighborhood where things are going all cash, waive your financing and appraisal contingencies. Use an escalation clause, and escalate in significant increments.  Get your loan fully approved before making offers.  Use a strong lender with a reputation for closing without issues. 

Russell Brazil, Real Estate Agent in Maryland (#648402), Virginia (#0225219736), District of Columbia (#SP98375353), and Massachusetts (#9​0​5​2​3​4​6)
(301) 893-4635
Originally posted by @Curtis Bidwell :

@Carly Snapp My son just recently closed on a home in Seattle ...on just his 3rd try!  He looked at the home the day it listed, had inspections done the following day, He was preapproved for a quick-close loan, THEN made his offer with a $5k escalation clause up to his top allowable price accompanied by a 5% non-refundable earnest money upon approval -with no contingencies.  He only paid $106k over ask.  With a few improvements and 2 months he already has equity! 

You have to be prepared and decisive, fully ready to act. 

Good luck! 

 Lol "He only paid $106k over ask." Geez 

In the Seattle market and surrounding areas you have to be extremely quick to take action and learn the market so well that you can spot a good deal as soon as it comes on. My Client was able to close on a home 2 blocks from Green Lake last weekend by doing just that. The home went on the MLS on a Thursday at 7pm and we went and looked at it at 9pm. I called the listing agent to let him know we were pre-approved and ready to close quickly that night and set up an inspection for the following morning. At 7am I drafted the offer and had it signed before the 10am inspection so that we were ready to get it delivered as soon as the inspection was done in case it came back clean. Offer was submitted by 4pm and although there were 4 other pre-inspections set for the following Saturday along with two open houses set for the weekend we were able to get the property under contract that night. Our original offer was at list price and the seller originally wanted to wait to see what other offers came in on Saturday and the other inspections.

We knew it would easily get bid up if it went through to the weekend so this was our one chance to get a favorable deal done for my Client so I asked them to counter at a price that they would be happy with so that we could get it done Friday night. The seller countered at $779K which was just $20K over asking and we signed and were under contract by 11pm on Friday! The next morning the seller received 4 offers in excess of $820K and we ended up having the lowest offer. Long story short, you have to take quick action and be ready to move as soon as you see something you like. Let other people who don't know the market as well and who are spending time analyzing miss out on the deal while you are taking action and getting the house you want! The more research you do, the better prepared and more confident you will be. 

Cash talks in markets like this. Quick, aggressive offers with a quick expiration. I have just learned about using an escalation clause, which is my new best friend. I generally don't event try to negotiate price until after I get the house off of the market, it's the only way to get any leverage in negotiations. Good luck!

Corby Goade, Real Estate Agent
208-297-3010

I would like to have the opinion of  RE agents on escalation clauses.
I might be wrong but it seems to me that signing a contract with an escalation clause is like playing poker and showing to our opponents the cards you have. And in that respect , the listing agent works against you because his interest is to get the highest price for his client. It is very easy with that clause to get a buyer to pay a higher price than he would have normally paid if that clause was not there.
What do you think?

That has always been my thought as well, Patrice. I guess it shows a level of commitment, but at a high cost...

I'm sorry, are we talking about investments here?


OP sounds emotional. Do not get emotional about real estate. Do not worry about "luck" or how "hot" the market is or how to time it. Whatever property is on the market now, you can live without it. You can live without it because you've made it this far without that house. The only person who wins a bidding war is the seller.

Are you looking for an investment property or a home to live in yourself? What state? What budget are you working with? Whatever your goals are, you should have run the numbers by now and have a realistic idea of what you can offer for a property based on what it can do for you. Don't succumb to hype and sign your life away. Over-paying and waiving your right to an appraisal or home inspection or letting the seller control the title company is the surest way to buyers remorse. If the terms of buying real estate in a given area are not favorable, there is nothing wrong with walking away and exploring other strategies.

With that said, as long as you're clear on all that we can talk about offers. Studies suggest that one way to make your offer stand out is to write the seller a personalized letter. Talk a little about yourself and what potential you see in that property. Sometimes the personalized offer from a qualified buyer wins out over the highest offer with no strings because the the highest offer is not always from the most qualified (or intelligent) buyer.

My source on this letter writing strategy:

https://www.wsj.com/articles/the-strangely-effecti...

^There is a paywall on that article, sorry.

Good luck!

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