How To Win In Multiple Offers

By MICHAEL EDLEN | Special to the Palisadian-Post

A buyer recently asked: “I offered the most money for a property that received multiple offers. Why didn’t I get it?”

Unfortunately for many would-be buyers in prime Westside areas, there are still more people trying to buy than there are sellers willing to sell. This has been the case since 2013 and could well continue to be so for at least another few years. The reasons for this situation are complex, but relatively easy to identify.

Demographics: The current generation having the greatest buying power is beginning to raise families, desiring to either buy a home of their own or to move to a larger space. The older generations are living longer, less motivated to move because of financial considerations such as taxes and willing to continue staying in homes much larger than they need.

Financials: The younger generation is often inheriting wealth from their grandparents or parents, coupled with the relatively high income they are fortunate to have. This combination enables a greater percentage of younger families to be able to afford homes in higher-priced neighborhoods.

Interest rates are still below long-term average levels, and more creative approaches have been used in the loan industry that make purchasing more affordable by temporary ways to reduce the rates.

The inevitable results of this combination of factors are simply governed by the law of supply and demand. Only one potential buyer can succeed in purchasing a home for sale, and the seller will often have more potential offers to consider in deciding whose proposition they will accept.

However, as this buyer discovered by experience, merely having the highest offer will in no way assure someone being successful in buying the property. There are many other factors that can significantly influence the course of events that determine who the eventual winner is.

To begin with, one must view the situation from the perspective of the seller. What would be the most ideal perfect offer that could best satisfy the seller’s wishes?

In many cases, that offer might be this:

1. More than the full asking price
2. An all-cash purchase (or at least the verification that it could be if necessary)
3. No loan contingency
4. No appraisal contingency
5. Relatively short property investigation contingency period
6. Escrow to close in less than a month
7. Seller can keep living there for several weeks after the escrow closes if they want to, at no charge
8. Buyer is represented by a well-known agent who has successfully represented many other buyers
9. Seller is given the choice of their own escrow and title companies
10. Buyer states that they will not ask for the seller to provide any concessions or do any work or repairs on the property

The buyer who asked that question had decided not to have an agent represent them in the purchase. Their reasoning was that by saving a buyer’s agent fees, their offer would be even more attractive to the seller.

Unfortunately, even though they did offer full price and a 30-day escrow, their contract included 14 days for removal of all contingencies. These included them obtaining an 80% loan and request to use an escrow company someone in their family had recommended.

Personal connections can also play a role occasionally. Some sellers may favor a potential buyer who is a family member, close relative of their neighbor, belongs to the same religious or fraternal organization, etc.

We once were involved in a transaction where the seller had several offers and decided to issue counter offers that were not identical in price due to various different terms in their offers. The seller was leaning toward one particular buyer because of an interest they shared in common. Ultimately they selected this buyer even though the price was more than $200,000 less than the highest offer had been.

Michael Edlen and his team have been involved in hundreds of multiple offer situations, providing a wide variety of winning strategies to help both sellers and buyers in the emotionally charged process involved. They can be reached at 310-600-7422 or michael@edlenteam.com.