Seattle’s has been in a steady state of multiple offers since 2012. Thankfully, there are rumors of an increase in inventory, and we would not be surprised if the market starts to level off by this winter. Regardless, the city of Seattle is prime for multiple offers in prime transit and “walkable” neighborhoods. Below is a comprehensive guide on how to win a multiple offer in Seattle for your home in the perfect location and condition (if you sacrificed size).
Guide to Winning a Multiple Offer in Seattle
Let’s get to work and get you prepped for winning a multiple offer in Seattle. Follow the guide below and figure out what are your top priorities, what your financing will safely allow, and how to manage the intensity of a multiple offer.
You’ve got this. Team Diva is at your back. We are not going to let you fail. And we will be honest with you when it is time to walk away from a house that would force you to sacrifice the firstborn, put you in financial jeopardy, or is just not worth the effort.
Prep Work – Winning a Multiple Offer in Seattle
Step One: Solve the Size, Location, and/or Condition Puzzle
It does not matter how much money you have in the bank. Everyone has to choose two of the three following home buying options:
Size: Bedroom Count, Square Footage, Room Size
Location: Walkable Neighborhood, Schools, Commute Time, In The Country
Condition: Brand new, Dated But Functional, Obsolete Systems
Once you know what your non-negotiables are, you can start the process of saving money to get you where you want to go.
Step Two: Get Your Financing In Order
The first thing you need to buy a house is understanding how you are going to pay for the home. Part of that first step to owning a home is getting approved for a loan with a reputable mortgage lender or have cash handy. Only about ten percent of home sales are cash transactions. The bulk of home buyers will need to get a loan with a lender.
Part of that lending process is understanding your cash on hand. Even if you’re financing your loan you need cash for down payment, earnest money, and closing costs. The more you have, the stronger your offer appears to sellers. It’s critical that you have those funds available before you submit an offer.
Whether the money is coming from your savings, parents, or stock investments make sure the funds are available when you submit the offer. You don’t want to lose your earnest money because you didn’t have funds available at closing.
How Do You Choose an Awesome Lender?
The lender you choose can make the all the difference between you and another buyer. Sellers don’t like dealing with banks based in different time zones that don’t understand our market. The best practice is to use a trusted, local lender.
An experienced agent will recommend local lenders that offer competitive rates and quick, diligent service. Once you secure a qualified lender, a fully underwritten pre-approval is your golden ticket to winning your home. Here are some tips to help you Choose the Right Lender For You
Other Buyer Education Blogs to Help You With the Lending Process
The financing portion of the home-buying process can feel overwhelming. And with some guidance, you can make this happen for yourself quickly and easily. Now go get educated and be smarter than the other buyers in the field.
Pro-Tip: That online lender from Costco is good at selling toilet paper. They have no clue on how to handle a hot Seattle real estate market.
Step Three: Choose an Agent that Is Going to Kick-Ass and Be Your Advocate Through This Journey
The bottom line is that you need an agent who is going to be y0ur ultimate navigator and make sure you are prepped for any situation you find yourself in. Buying a house is one-of-a-kind experience, and nothing else can prepare you for the intense process. Luckily, we have been through it many times and understand that every time has unique rewards and challenges. Below is a blog about how to choose the right agent and some questions to ask prospective home buying guidance counselors.
Questions to Ask a Prospective Real Estate Professional
- What happens if I fall in love with one of your listings? Will you find me another buyers agent or will you do both sides of the transaction?
- What type of education do you provide about the home buying process?
- What is your communication process?
- What type of support do you have if you take time off or travel?
- What happens if the transaction ends up in litigation?
- When should lawyers get involved in a real estate transaction?
- What type of education have you had to help you navigate your negotiation process?
There will be other questions that are meaningful for you. It is critical that at the end of the process you work with someone who works well with you.
Pro Tip: The intake process Team Diva goes through with their buyers ensures that Diva Dwellers are genius about the market and have a deep understanding of what they want in a home. We call it the “What is your 80% house?” This intake method allows our clients to get into the flow and be fully present in the process. In other words, you are not that buyer making nine offers to win a home.
Step Four: The Search
Frankly, it was a bit shocking at open houses during the peak market when visitors told us that they lost nine offers. Wow…there were nine houses worthy of you making the effort? Holy crap. That is a lot. And it is an emotional toil to not have a focused home search process.
The Intake Process Informs the Search Methodology
Team Diva has a specially designed intake process that helps our buyers get to the heart of what they are looking for. It accounts for where they can afford to buy a home and their priorities, and from there we build the search process.
Buying a home is more than the basics of bathrooms and bedrooms. It is all about how you are going to live in the home. The result of our intake process means a faster cycle time from pre-approval to move into your home. Below are some tips and questions to ask yourself before you start the search.
What do you want in a home? And why do you want it?
“I want a yard!” Why? “Cause I want to grow my own vegetables and I am really into gardening.” Okay, you want a sunny yard. When we comb through listings, having established priorities allows us to quickly say no, no, no….. this one! Bright sunny south facing yard. Boom! Get it!
Where should I start my Search Levels?
The other critical component is to keep money in reserve during your home search process. Look for a home that is 10% to 20% below your approval or cash on hand level. And be prepped to have additional money in reserve to pay for a low appraisal or do major work post-closing.
You get the idea. Be focused and be intentional. You might be buying in a peak market, but you know you bought the house you wanted and can hold on if the market trembles a bit down the road.
Pro Tip: Look for the house that is super special, unique, poorly marketed, and has other issues that will keep the hordes away from the home.
Step Five: You Found the House and You Are Ready to Win It!
Here is where it gets nerve-wracking. You are in love, and you might not get the home. You have to go into these situations with a Diva Zen type of attitude and tell your sell if it is meant to be, it will be. And if not bless and release. Know that Team Diva has been through these situations countless times. They will be your rock and help you get to the other side.
Below is a detailed guide on winning the house.
Preparing for The Best Offer For You in a Multiple Offer
What Does Team Diva Do?
Behind the scenes, we will start the process of reaching out to the agent and gathering intel. Specifically, we want to see how well the house has been presented, the type of activity it is getting, and how well the agent responds to multiple offer situations. Sometimes a good house in a great neighborhood happens to an agent without a lot of experience. And sometimes you have a highly skilled agent working a neighborhood that doesn’t normally get multiple offers. Both situations can create a perfect multiple-offer storm.
Market Research and Tasks Team Diva Will Be Doing
Let’s pretend the home is priced at $700,000 and the market conditions have created a perfect real estate multiple offer storm. Here is a sample of what we will send to you.
- Listing Broker’s List to Sale Price at their Highest is 105% = Potential final price is $735,000
- Neighborhood Average List to Sale Price is 112% = Potential final price is $784,000
- Working with the listing broker on critical documents in relation to the house (title, seller disclosure form, etc…)
- Working with your lender on how quickly you can close on the home, financing options, etc..
What Do You Need To Do?
Winning offers is all about reviewing everything about the house in advance. Normally you would have a week or so once you get into contract on a house to do your due diligence. In a multiple offer, the seller is looking for a buyer who is committed all the way. That means you need to do all of your due diligence on a home BEFORE YOU MAKE AN OFFER.
Team Diva wants you to be committed AND we want you to do your due diligence on the home. At the end of the day, you will be the one owning the home, and you better know what is going on with the property.
Conduct a Pre-Inspection
There are a lot of rumors out there that are forcing buyers to trust the information of a seller provided in an inspection report. The bottom line is that Washington State is a Buyer Beware State. That means that if you have been given the opportunity to do your due diligence and you waived it, you have minimal legs to stand on in case the home goes into a lawsuit. You MUST DO YOUR OWN INSPECTION on a home to be fully knowledgeable about the home. Below is a quick guide on how to prepare yourself for a pre-inspection.
Pro-Tip: Please hire an inspector that understands houses, has built homes, and will be there for you regardless of what happens after you win the home. Getting your inspector license is relatively easy, and there are a lot of people out there who are in this game to make a lot of money quickly off of desperate buyers.
Review the Title Report
The title report is the piece of information that is most often overlooked in a real estate transaction and it is the most critical. I have received calls from friends of friends who have bought a home only to learn that their driveway is shared with the neighbor and the neighbor is an asshat. Unfortunately, no one truly understands the power of the title report. Hence you need to do your review.
Below is a blog to help you understand what to review, how to ask questions, and get the references you need to make a smart choice.
Pro-Tip: Let’s get you in touch with the title company and have you get your detailed questions answered about the title report.
Review the Seller Disclosure Statement aka The Form 17
The seller disclosure form comprises six pieces of paperwork that the seller completes, which state all of the known facts about the home. The problem with this form is that it is one-size-fits-none. There are questions for mobile homes, ranches, and suburban homes all on the same form. Unsurprisingly, it is the form that is most litigated when a real estate transaction goes bad.
Here is the deal: The seller is supposed to disclose anything that they know about the home, including items that they found out from the previous owner. The reality is that most sellers put down “I Don’t Know.” What is a smart buyer like you to do? Do your own due diligence and get all of your questions answered before you make an offer.
Once again, doing a detailed inspection is critical to understand what is happening with the house.
Review Paragraph W in the Purchase and Sale Agreement
Paragraph W gives the buyer additional time to review all of the marketing remarks, seller disclosure statement/Form 17, and everything else provided by the seller for accuracy AFTER the home goes into contract. Technically, the buyer can use Paragraph W to get out of the contract with minimal proof once the house has been sold. Hence listing brokers want you to waive it in a multiple offer situation. They want to confirm that you are committed to the house by removing your ways out of contract.
Once again DO YOUR WORK, review everything that is pertinent BEFORE making an offer. This includes the Seller Disclosure Statement, Title Review, Pre-Inspection, etc…
Write a Love Letter for the Home
Team Diva has won homes with the right love letter. And I have seen good buyers on the listing side shoot themselves in the foot by writing crap letters. Do not underestimate the ability to sway a seller with a well-timed and honed love letter.
What are the components of an awesome house love letter?
Do: Quickly describe who you are, why you love the home, what you might have in common with the sellers and why YOU are the best buyers for the home. Include some cute photos. Buyers want to be able to relate to you and feel a connection.
Don’t: Do not talk about which parts of the house you think needs work, why you do not want to offer more money, or the work you do for a living. People want to know how you will be living in the home. They do not care why or how you have the money for your home.
You’ve got this!
Low Appraisal Preparation
Sellers are looking for winning offers that are willing to close the gap in case of a low appraisal. For example: The final offer price on a home is $800,000. The appraised amount comes back at $775,000. The lender can only lend on the $775,000 amount. How does the buyer close the gap of $25,000?
Option One: Close the gap on a low appraisal up to a certain amount. Our parent company, Coldwell Banker Bain, has written an addendum that helps to protect the buyer and limits the amount a buyer has to come up with in addition to their down payment. The addendum states the buyer is willing to make up $15,000 in case of a low appraisal. It could be $10K, $20K, etc.
Option Two: Waive your appraisal in the financing contingency. Option two is best suited for people who are putting down 25% or more. You are already at a down payment amount that most lenders will only do a spot appraisal on the property.
Get Educated About What Waiving Or Closing the Gap on a Low Appraisal Means: Below are two blogs to help you navigate this tricky component of navigating a multiple offer.
Pr0-Tip: Talk to your lender and your real estate professional in detail about what this means for you. During the peak of the market, we saw offers come in for our listings where there was no real understanding by the buyers of what they were putting down on paper. Yikes!
Seller Rent Back
Some sellers need to sell their homes to buy their next properties. As a result, they cannot move out of the home right away and need to “Rent Back” the home from their buyers. There is an addendum that protects the buyer and the home in case the seller does not vacate at the final date or damages the home.
The buyer can provide a seller rent back up to 60 days post-closing. Maost sellers are expecting to not pay any rent during their tenure as sellers/renters/squatters. The majority of seller rent backs go smoothly and have minimal impact on the buyer. We have also seen the buyers win houses with a lower offer by being generous with the seller during their rent back.
Your Offer is Set to Make the Winning Offer… Congratulations!
Oh my goodness, what a journey! You now know more about the home than the sellers do currently. You are prepped. And you are going to be making the best offer possible.
Our general philosophy at this stage is that you can only do the best you can do, and if someone else comes along and blows you out of the water, bless and release. It wasn’t meant to be. Just trust that our Diva Dwellers are in the flow, understand what they need to do, and win more houses than the average buyer. And more importantly, they are going into these multiple offer situations with more knowledge about the house than the majority of buyers in hot markets.