A multiple offer situation happens when you have a bunch of people bidding to buy the same property.
Today I’m going to show you exactly how to make your Contract of Sale stand out in a competitive market.
In fact, these are the same steps that helped me secure my home for $5,000 LESS than the next offer.
And I should point something out:
This is a non-technical guide to making your contract stand out.
So if you’re not super technical (like me), you’ll love the simple steps in this guide.
Let’s get started.
Table of Contents
1. Ask for the Multiple Offer Form (in QLD)
If you’re anything like me, when a Real Estate agent says ‘there is another offer on the property‘ you just want to roll your eyes…
And while I’m sure some Real Estate agents use this tactic to get you to bid against yourself, in Queensland there is a Multiple Offer Form that you should sign if there REALLY IS another offer on the property.
According to the REIQ, “there are heavy penalties for agents who mislead or deceive buyers by telling them there are competing offers when there are not.”
When filling out the Multiple Offer Form, the agent will tell you to submit your best and final offer, and it shows that the agent is not leading you on because there really is another offer on the table.
Now with you needing to make your best and final offer you can use some of the tactics in this article to make your offer as sharp as possible, including moving the settlement date…
Download: Multiple offer form QLD
2. Move the Settlement Date
The person selling the property is wanting to do just that – sell the property.
If you don’t know their specific motivations, it is worth asking the Real Estate Agent why they are looking to sell.
A shorter settlement date will suit sellers who have bought another home and need to sell quickly.
Whereas a longer settlement date might work for someone trying to finalise a marital split, or divorce.
It’s worth asking the Real Estate agent what the seller’s ideal timeframe is, and matching your offer around that.
Typically in Queensland, the shortest settlement date you can hit is 30 days. Anything less and there isn’t enough time to get your finance approved and documented.
3. Increase your Deposit Amount
In Queensland there are two deposits payable when you buy a house:
- Holding Deposit – Usually $500 to $2,000 (or up to 0.25% of the purchase price)
- Balance Deposit – Usually $10,000 to $20,000 (or up to 5% of the purchase price)
A bigger deposit can give the Seller (and the Real Estate Agent) confidence that you are going to be more likely to get your finance approved.
In a situation where there are multiple offers on the table, a chunky deposit can show the strength of your offer, and even going so far as to attach a cheque can send a strong message to the seller.
4. Have your finances in order
A good Mortgage Broker can help you determine a budget, and put together your loan eligibility or apply for a pre-approval to help you go head-to-head with other buyers.
The reality is that some banks pre-approvals are nothing more than a credit check, where they haven’t verified your payslips and other documents and require more time to get your loan unconditionally approved – so they literally aren’t worth the paper they’re written on.
This can cause you lots of delays when you’re trying to get your loan approved quickly!
Working with a Mortgage Broker that understands the difference in pre-approvals, and making sure your loan can get approved quickly is important.
5. Sharpen your Finance Date
The tighter your finance, the fewer conditions need to be met before your loan is unconditionally approved and the fewer days are needed for your finance date.
(The finance date sets the number of days you have to obtain an unconditional finance approval on your contract)
In Brisbane, it’s common for home buyers to put 14 to 21 days for finance.
To make your offer as competitive as possible put 7 days for finance approval. If you already have your pre-approval in place you potentially only need a bank valuation completed, and could reduce to 5 days for finance.
Provided your mortgage broker has arranged your pre-approval these terms will be very achievable
6. Drop the Building & Pest
As with the Finance Date, the Building & Pest date can make or break some contracts.
I’ve seen situations where properties have been on the market for months, they have had multiple failed Building & Pest inspections (for non-structural items that scared other first home buyers away) and the sellers were willing to take $10,000 less on their sale price provided the buyer waived their Building & Pest clause.
Now I’m not saying you shouldn’t get a Building & Pest Report (in the situation above the buyer was a builder and understood the risks) but I’m saying if its possible to drop the number of days required to obtain your Building & Pest report you will have a better chance of winning!
Read More: What does a Building & Pest Report Cost?
7. Play roundup
The majority of contracts offered on homes are rounded to the nearest $10,000.
A study on Real Estate Prices found that home priced ‘just below’ were more likely to sell.
In other words, homes that were priced at $199,900 instead of $200,000 were significantly more likely to sell.
Remember most buyers round to the nearest $10,000.
So instead of offering $560,000 try offering $560,900 or $561,200 that small amount could make the difference!
(And its a good way of convincing the sellers that it is really your best offer)
We’ve had clients secure homes using this very technique, they were $1,420 higher than the next offer and this small amount ultimately helped them secure a home!
8. Write a Personal Letter
The reality is most of the time you’ll be buying a home through a Real Estate agent and the sellers will never meet you.
And it’s important to remember property can be deeply emotional…
They might be selling their family home, where their kids grew up. Or a house they put their own sweat and tears into renovating!
A personal introductory letter explaining who you are, what your circumstances are, your plans on raising a family, etc might be the difference between deciding on your offer and the next buyers.
It might be a long shot, but still, it could be the cheapest way of making your contract stand out!
We had a client use this very technique, and secure their home for $20,000 less than the other offers! His kids drew a picture for the sellers, introducing their family and explaining how the home would be perfect.
The seller was an old lady who had lived there for years and years, and she loved the thought of her beautiful home going to a family over an investor – so took the lower offer.
9. Don’t get caught up
Fortunately, you have the luxury of not being at auction, you don’t need to get into a bidding war and blow your budget.
The best part of buying with a private sale is that you have much more time to think.
Real Estate agents regularly use the Fear of Missing Out (FOMO) to sell a property, as quoted in this recent newspaper article:
This property spent months sitting there, but with any property I take to market the emotion I lay on is fear of missing out. We have to create the competition. If we don’t create competition the buyer doesn’t feel pressured to make a move on the day, or any time soon, or pay more than what they’re willing to pay. If you want to talk how people react, it’s the fear of missing out. Source: AFR
So remember the Real Estate Agents are trying to use your own FOMO to bid you up or feel compelled to make an emotional decision.
Take time to make your decision, stick to your budget and make sure you don’t get caught up in FOMO!
Remember, there’s always another property!
Bonus - 5 Things You Should Know Before Making An Offer On A Property
- Who owns the property? How you negotiate with an owner is completely different from how you would negotiate with an investor. Ask the real estate agent who owns the house how long they have owned the property and if they were living on the property or renting it out.
- The sales record of the property. It is important to find out when the property was last sold and how much it sold. If the agent does not give you this information, you can get it on realestate.com.au or onthehouse.com.au.
- Why are the owners selling the property? Are they going through a divorce, is it a deceased estate,, or is the owner being forced to sell? Knowing the motivation behind the sale will help you make the right offer on the house.
- The current land valuation. To find this out, get a copy of the current rates notice through the real estate agent or ask your broker or banker to get this information from their RP data subscription. Knowing this will allow you to understand how much of a bargain you’re getting. For example, if the property’s selling for $500,000 and the land valuation is $400,000, you’re essentially getting the home for $100,000.
- The price of the property. This may seem like a no-brainer, but it is common for properties to be listed without prices. So if this is the case for you, you want to ask the agent what the seller’s expectations are, and don’t be surprised if the agent shoots back, saying that they’re open to all offers. You then find out what properties of similar qualities in the area have sold for over the last three to six months. This will help guide you in understanding what the owner is looking for.
Next steps and settling your new home
Our team here at Hunter Galloway is here to help you buy a home in Brisbane. Nathan & Jayden Vecchio are Senior Mortgage brokers who specialise in making your home journey easy.
Unlike other mortgage brokers who are just one-person operators, we have an entire team of experts to help make your home loan journey as simple as possible.
If you want to get started, please get in touch here, and we can book a time that suits you – either a phone call information session or a face-to-face meeting (which doesn’t cost anything for you).
Further reading for Home Buyers…
- For our comprehensive guide for First Home Buyers, check out this page here.
- Looking at getting a loan, check out our Complete First Home Buyers guide.
- And don’t forget the costs of buying which we covered in detail here.
Reference: REIQ’s guide to multiple offer situations
Ready to take the next step toward buying? We’re happy to help. Schedule a call today with a Home Loan Expert from Hunter Galloway, the home of home buyers.