October 6, 2011
How to Compete in a Competing Offer Situation
by Kelley Skar
Competing Offers – Do Not Overpay
Wonder what competing offers really mean? Simply put, it is the situation when you are interested in a property and make an offer – and another party who is also interested in the same house or condo makes an offer at the same time or on the same day or sometimes even in the middle of your negotiation.
At this point you are now in a competing offer situation. You are competing with another party, represented by a different REALTOR® (typically), and both of you are in love with the same home. Sounds simple enough right?
Well it can be, or it can lead to situations that we saw back in 2006 and 2007 where parties were competing with each other because of the lack of homes on the market. They were making offers without conditions, CASH offers with NO home inspections or condo document inspections!
Competing Offers do not Have to be Scary
Seriously! Competing offers do not have to be scary! If you have a pro working for you and guiding you through, you should not have to worry! Here is what I mean…a lot, if not most people think that when you get into a competing offer situation that you HAVE to write an offer OVER the asking price! Nothing could be further from the truth!
Recently my clients wrote on a property that they really liked and it turned out that we were having to compete with someone else to get it. We eventually did not get the property due to the fact that our offer was not HIGH enough.
I would like to congratulate the other party on “getting” that beautiful home, however I feel that they wound up OVERPAYING for a property that was very well priced to begin with.
Do Your Homework BEFORE you Compete
Honestly….I am not saying this to be smug or brash or bitter. I did my homework for my clients; in fact we all sat down to look at the comparables and we agreed that the home was very well priced but to pay anything more than asking would have been doing a disservice to my clients just to collect a check!
Make sure you have a REALTOR® that is experienced in working with buyers – that is my first piece of advice. Second, make sure that your Agent does a Comparative Market Analysis (CMA) on the property BEFORE you write ANY offer. This way you will know that you are not overpaying for a property when competing and if you decide to overpay, it will be your decision to make. But at least you will know beforehand.
At the end of the day you do not have to pay full price or even overpay for a property to get it when you write a competing offer. Make sure that you have a strong and clean offer, meaning:
- You meet their possession date
- There aren’t any weird conditions or terms attached (please note I am NOT saying NO conditions!)
- You have a strong deposit
- You have an experienced Agent to guide you through the process
My last piece of advice would be this: as a buyer, be prepared to WALK AWAY from EVERY home that you “fall in love with”. This will make it so much easier to get over if you do not wind up getting that dream home.
About the Contributor
Kelley has consistently been in the top 5% in sales since he started full time in the real estate industry in 2008. He went through a major shift in his marketing plan at the end of 2009, recognizing the trend, and making the move towards digital marketing including websites, video, blogging and social media. Kelley is incredibly passionate about the use of technology and social media in his business and is often sought out for advice from other Agents from across North America. Kelley’s primary websites are: http://nwcalgaryliving.com and http://kelleyskar.com.