CHICAGO, Sept. 29, 2016 – Few homebuyers relish a bidding war, yet more of them have faced that prospect in the Chicago area thanks to a limited inventory of homes for sale, RE/MAX reports.
RE/MAX brokers offer the following advice to buyers on how to master such situations.
1. Find out how probable it is that a multiple offer situation will develop.
Affordably priced homes are the most likely to attract multiple offers, explained Tim Winfrey of RE/MAX Unlimited Northwest in Bartlett, Ill. In his market, that has been true for homes priced at $300,000 or less, but it can vary with the community. In some posh suburbs or desirable Chicago neighborhoods, a home priced at $750,000 could spark a bidding war.
According to Winfrey, price isn’t the only factor. Homes in excellent condition and those with outstanding locations also tend to attract wide interest from buyers.
2. When an appealing property comes on the market, schedule a showing right away.
“I tell buyers that if a house they like comes on the market on Wednesday, they can’t wait for the weekend to see it,” said Kathy Healy of RE/MAX Town and Country in Aurora, Ill. She noted that in her market area, almost any home priced at $200,000 or less has drawn multiple offers in recent months.
3. If buyers like a home, quickly write a strong offer.
In one recent situation, Healy took clients to see a home she felt was an excellent value and learned that the listing agent had already received several offers.
“My clients loved the house, so we immediately offered $12,000 over list price, and though there were eight other offers, my clients ended up getting the home,” she said.
Sharon Wang of RE/MAX United in Wheeling, Ill., works with many investor clients and said about half of the properties they pursue receive multiple offers.
“I tell buyers that paying a premium doesn’t make a big difference in the long run because mortgage interest rates are so low now. If a home really fits their needs and has a location they want, it can be worth it to push the envelope with their offer,” Wang said. “But in the final analysis, it’s a decision the buyers need to make and be comfortable with.”
4. Make your offer simple.
“The less you ask for, the stronger your offer will be,” explained James Cesarek of RE/MAX Sauk Valley in Sterling, Ill. “Being a cash buyer or committing to a 20 percent down payment makes for a stronger offer in many cases,” he said. “You want to make your offer as strong as possible from a financial perspective.”
Healy said that she advises clients facing multiple offers to deliver an offer that is as clean as possible, with a minimum of contingency clauses, flexibility on the closing date, and a letter of preapproval from a well-known, reputable lender.
5. Include provisions for an appraisal.
The major concern of most buyers in a competitive offer situation is that they will overpay for the property, explained Cesarek. If the offer contains a mortgage contingency clause, the buyer has some protection because the lender will insist on an appraisal. If the appraised value is below the agreed price, the buyer can decline to proceed with the purchase.
Even when buyers are paying cash, Cesarek will urge them to make their offer subject to an appraisal as insurance against paying substantially more than the home’s current market value.
6. Don’t try to renegotiate the contract based on minor problems found during the home inspection.
“When there have been multiple offers, the winning buyer has to realize that the seller has other alternatives, so if some minor problems turn up during the home inspection, it probably isn’t a good strategy to demand major concessions from the seller,” said Beth Rose of RE/MAX 1st Service in Orland Park, Ill.
On the other hand, if truly major issues emerge, the buyer is still in a strong position to ask for concessions because the seller would be obligated to reveal those problems to other buyers.
RE/MAX agents consistently rank among the most productive in the industry. In 2015, RE/MAX Northern Illinois agents averaged 18 transaction sides. RE/MAX has been the leader in the northern Illinois real estate market since 1989 and is continually growing. The RE/MAX Northern Illinois network, with headquarters in Elgin, Ill., consists of more than 2,250 sales associates and 106 independently owned and operated RE/MAX offices that provide a full range of residential and commercial brokerage services. Its mobile real estate app, available for download at www.illinoisproperty.com, provides comprehensive information about residential and commercial property for sale in the region. The northern Illinois network is part of RE/MAX, a global real estate organization with 104,000+ sales associates in 90+ nations.