Let’s Ask Katie
Expert Advice for all your real estate questions from Katie Machoskie
We are new to the area and just lost out on a home due to multiple offers. We were shocked this is still happening! How can we present the best offer in this kind of situation
Kris and Rob, Newport Beach
Hi Kris and Rob, It’s still a very competitive market due to low housing inventory. The best way to avoid multiple offers is to write a clean, compelling offer. Below are a few tips to do just that!
Highest and Best: Write as close to your highest price you are willing to pay.
Initial Deposit: Have a substantial initial deposit (also known as “earnest money.”) Putting down a larger-than-usual deposit shows the seller you are committed to buying the property. 3% of the purchase price is the norm. is average. home.
Cash offers versus financing: Cash offers are usually considered the strongest offers because the buyers can close quickly without relying on lender approval. However, Buyers with pre-approved loans that have been cleared by an underwriter are in stronger positions than a buyer with a simple pre-qualification letter. A loan pre-approval, means an underwriter has reviewed the buyer’s income and asset documentation. A pre-qualified buyer hasn’t been through a verification process; the lender hasn’t reviewed their financial documents and usually has only had a brief conversation with the loan officer. Know the difference!
Waiving contingencies: Serious buyers in a competitive market can strengthen their offers by waiving some or all contingencies. Forgoing contract contingencies limits the buyer’s ability to back out of a contract without jeopardizing their earnest money deposit to the seller. Contingencies (or their contingency removal deadline) such as appraisal, inspection, and financing are often shortened or waived. .
Flexible Timing for COE or Possession: Offer closing or move-out timing that works for the Seller. A quick escrow with a Seller Leaseback allows the seller to have funds to find a replacement home, and coordinate their move out to coincide with timing for moving into their new home, their kids’ school transition or a job relocation.
Escalation Clauses: Responding to a Seller Multiple Counter Offer sometimes feels as if you’re negotiating in a vacuum, because you don’t know what the other offers are. Adding an Escalation Clause can help your chances. For example, you could offer “$1,000,000 or $1000 over the highest offer, not to exceed $1,035,000.” Adding a cap to your escalation clause protects you from overpaying or paying a price you feel may be over the bank’s appraised value if you are getting a loan.
Katie Machoskie is a real estate agent and team lead of Machoskie & Associates at COMPASS in Orange County. She has sold over $1 billion and she and her team of neighborhood specialists had over $172 million in transactions in 2022.