Winning the Bidding War - Part III: Working with Dates
A while back we talked about making the bid personal, but that's something a lot of people are doing in today's market; however terms can be more important than price. There are many times when a deal can come apart, and offering attractive terms can help alleviate concerns for the seller's side of the transaction. In a buy-side transaction just outside Boston in Waltham, MA, my client's offer was not the highest (but was still one of four offers at or above the asking price), but won out over other higher offers because of the terms. I would never advocate a client waiving an inspection or a mortgage contingency unless there is a plan worked out behind the scenes to keep them protected; rather, we were able to secure an inspector for just a day or two later which allowed us to shorten our inspection contingency time. My clients were able to offer very flexible closing terms that allowed the seller the option to stay a short while longer if need be and were able to present more cash with their deposit and at closing than some of their competition. Ultimately, my clients are going through the buying process on a home that is perfect for them, but they ended up paying market price rather than a premium to win a bidding war due to a great strategy going into the process.
Working with Dates
There are a few ways to alleviate these concerns:
- Flexible Closing Dates: A number of times the past few months, I was encountered with an ever-popular question, "If I sell now, where will I go?" both from my own seller-clients and the sellers of homes my clients were offering on. One means of alleviating this concern is having the ability to offer flexible closing dates. Are you currently renting? It may make sense to begin your search sooner than later to give more flexibility down the line ("I can close in as early as 30 days and deal with paying out my rent/sublet, or I can close as late as 'insert lease end date here' if that is better for you, Seller"). This is why it's important to hire an agent who isn't afraid to have upfront conversations with their colleagues on the other side of the transaction to ascertain how best to structure your offer to make it as competitive as can be.
- Use and Occupancy: The term "Use and Occupancy" is used when a buyer agrees to close but then basically lease the property back to the seller for a given period of time. It can also work the other way - where a seller cannot close for tax or other financial reasons but the buyer needs to move in.
- Quick Inspections: I've been at many open houses where prospective buyers actually show up with a home inspector or contractor. While usually more successful at single-family homes (no special requests needed to access systems, roofs, etc. as there might be for condo units), this practice can often help buyers feel at ease enough to waive inspection contingencies, or at least put a fairly high limit on the dollar amount of items a buyer would be willing to accept. What is important in this case is to ensure your inspector will get back to you in a reasonable time. Some inspectors can email a report with pictures immediately after the inspection using current technology such as iPads, while others still handwrite notes and type reports after the fact, leading to turnaround times of 24-48 hours. The other aspect to consider is whether a buyer would like to perform additional testing such as for radon gas or lead paint, which often take 2-3 additional days, or can stretch out a contingency window by weeks!
All of this is important to work through with your real estate professional along the way. It is important that these conversations take place early on in the homebuying process. Generally, I hold a "buyer consultation" before going out with any buyer to run through the process and ensure that if the buyer was to find the home of their dreams on their first tour, we are in a position to present a competitive offer.