The Psychology of Multiple Offers

Multiple offers are common in today's market. When you go into these situations, at what point does the bidding become too out of hand and too expensive? And when you find yourself in a bidding war, how can you succeed?

Multiple Offer Situations Can be Overwhelming

One thing I tell all of my clients when we are in these situations is more people are like you than you may think. Buyers in a multiple offer situation do not want to overpay. They are nervous about even being in this situation in the first place; no one wants to be in a bidding war.

The buyers I work with have the same concerns and insecurities that you are likely having. Questions like, "Is this the right decision," "Am I paying too much," and "Is this too much of a risk?" run through everyone's mind in multiple offer situations.

The concern I hear from many of my clients is, "Am I ever going to see a house this perfect again?" When this conversation comes up, I always say, "If this one doesn't work out, you will find a home, you will love it, and this home you are so worried about will just be a memory."

Strategy in Multiple Offer Situations

The goal in multiple offer situations is not to just be the winner, although we all know it feels great to win. I represent numerous sellers, and I am frequently on the other side of this ball game. The following are winning strategies I have successfully implemented for many years. 

Build Relationships

You would be shocked if you saw the offers that show up in my email right before the offer deadline. Many are from agents I have never spoken to; they submit a great offer, but the seller and I have no relationship with them. These offers would be great in any other market; however, we have more to choose from in this current market.

If a buyer's agent has formed a relationship with me and stays in the mix, I reward their diligence. If these agents ask for more information, I work with that buyer's agent as long as it is in my client's best interest. It is advantageous for an agent making an offer on one of my listings to have an open dialogue with me. And on the flip side, If I represent the buyer, I am working on getting to know the seller's agent, sending emails and texts, calling them, and staying in the loop. Networking and relationships will always place you at the top of the competition. 

Information is Power

The more information I have, the more power my clients have. I get that information by forming relationships with other agents. 

Collect Information on:

• The seller's situation
• Their LinkedIn profiles
• Their social media

The more information, the better!

You Want to be in the Mix at the End

Making an offer with limited contingencies or an escalation clause, although an effective tool to utilize, when necessary, can often end with two random bidders simply bidding one another up much more than necessary. That is not the position you want to find yourself in as a buyer. An escalation clause, for example, is just plus or minus a couple of thousand dollars up from the next offer. Generally, the seller's decision does not come down to price; it usually comes down to terms.

The goal in multiple offer situations is to know what is happening with the other offers. We want an opportunity to make changes to our offer before the seller makes their final decision. 

Relationship building is the only way to stay in the mix, giving us a chance to add terms that the seller wants. For example, it may be a free rent back that another offer included (and what the seller wants). Still, because of the communication between the parties, often your offer will be accepted even if your bid is lower. 

Psychology Plays a Pivotal Role in Multiple Offer Situations

My job as an agent is to guide you through the home buying experience, which can easily be a multiple offer situation in today's market. 

A good agent helps you manage the emotional side of home buying. They help you stay rational, not get overly attached to a home, and know the best course of action in finding you the right home. A good agent makes sure you end up with the house meant to be your home. 

Tips:

• Write Clean Contracts- free of any errors.
• Personal Letters Do Work - despite what you may have heard.
• A Home is Only Worth What Someone is Willing to Pay - you just don't want to pay more than you need to make it your home.

If you have any questions, or you find yourself in need of some help, feel free to reach out to me.

For more information about the psychology of multiple offers, watch my YouTube video.