Articles and Advice
It's a hot seller's market, as anyone trying to buy a home these days must know. Many would-be homeowners are getting frustrated, making offers on homes and then losing out when someone else snatches them up. In the real estate world, this has become the new normal, but it's no less upsetting for disappointed home buyers, who expend time and energy trying to find just the right home.
You may think a clever way to snag your dream home would be to make multiple offers on different houses. However, this option may not be allowed where you're shopping, and even if it was, you want to avoid this practice, as it's generally considered unethical. We'll explain why as well as give some tried-and-true methods for how you can increase your chances of securing that home you've been eyeing.
Why Making Multiple Offers on Homes Is Not Cool
At first, it seems to make sense. After all, if you don't make offers on two or three homes, you tell yourself, you may not ever be able to get an offer accepted.
But think about it. With each offer, you're likely going to have to put down an escrow deposit. Typically, an escrow deposit will be between 1 and 3 percent of the cost of the house. And, as you probably know, these days you should put down as much as possible, or you risk your offer being rejected. Let's say you're looking at a house priced at $275,000. At 3 percent, the deposit would be $8250.
But picture having to put down an offer on three houses simultaneously. Say the houses are all priced close to $275K. You could end up having to come up with escrow deposits of $24,750. Ouch! Then, in a worst-case scenario, all three sellers accept your offer. What do you do?
You will lose the escrow deposit on two of the houses. Further, you can take credit for causing two sellers hardship they didn't need. Since you presented yourself as someone with a serious offer, they likely thought you wanted their houses. What if they were under a lot of stress to sell a house — say, because of an impending move?
What's more, you and your significant other no doubt will be thinking about what you could do with that lost money: save for college, buy furniture, make some renovations, or take a vacation.
Avoiding Multi-Offer Pain
One way to avoid this multi-offer jam-up is to put down a serious offer on your no. 1 preferred home. Ask your agent to communicate that you need an answer that day and that if you don't hear back, you will have to put an offer on another home tomorrow. That way, the seller can't waste your time because they're delaying a response while waiting for a better offer than yours. So you won't lose a chance at your second choice of a home because you delayed too long making an offer.
If you need more advice about making offers for the home you have your sights on, don't hesitate to reach out to your real estate agent. They have the expertise you need to make the process go as smoothly as possible.