Making an offer for real estate in Maplewood, South Orange, Montclair, or other Essex County commuter towns of New Jersey was not for the faint of heart pre-Covid-19, and even less so since Covid-19.
While the real estate options in Essex County’s bedroom communities have become an even more desirable option for urbanites, Sellers of the area have staved off their plans to list due to fear of exposure to the virus.it’s the law of supply and demand! This has created even more demand for homes and even less supply than normal.
If multiple offers are on the table, there are some strategies to consider. Disclaimer: we are not necessarily recommending these strategies, just offering them as options in a competitive market.
Listing Agents will often consult their clients and compose a Seller’s “wishlist” with the Seller’s most desired terms. This gives Buyers some direction on how to “sweeten” their offer.
Let’s be real, the first request is almost always “highest offer amount”. But while it is always about the offer amount, it isn’t always *only* about the offer amount. Capisce? No? Let’s review…“Highest offer amount…” is often followed by “…and best terms”. We know what “highest offer amount” means, but what are “best terms”?
Best terms are based on the specifics of the Seller’s circumstances and may include:
- Accommodating a particular close date or time-frame. This is a big one. We all have the timelines in our life. Many sellers hope for a quick close to expedite their next steps. Others hope to finish out a school year or delay a closing for whatever reason. If a Seller’s timeline can be accommodated, it is sometimes worth just as much as the dollar amount of the offer.
- Offering more cash than less cash, if possible. A higher cash to loan ratio can help ensure a smoother transaction.
- Putting more money down upfront for the initial/additional deposits. This indicates enthusiasm and shows more “skin in the game”.
- Offering a mortgage commitment that has already gone through underwriting – ask a Lender about this option which positions you as a more solid loan candidate.
- Limiting of inspections:
- Waiving lead paint testing on the Lead Paint Disclosure does not mean you can never test for lead paint – it means that you don’t expect the seller to remediate the lead paint that has likely existed in the deep paint layers of the home for decades.
- Limiting inspection requests to those of a major structural and environmental nature. Safety issues, major systems, mechanics, operations, and wood-destroying insects can also be added as exceptions to these limitations for buyer protection. Employing this language basically means you won’t nickel and dime the Seller during inspections.
- Offering to conduct inspections and submit requests in a shorter time frame than the default NJ Real Estate contract 14 day period. Expediting the process to seven to 10 days helps everyone get through this precarious stage of the transaction quicker.
- Offering a certain dollar amount towards inspection issues; “Buyer will cover $_______ of costs that arise due to inspection issues”.
- Waiving of the appraisal to the list price. The list price should be the amount the Seller believes the property will appraise for based on comparable sales. The offer price is the amount the property is worth to the Buyer. When making an offer above the list price, covering any potential appraisal discrepancy between the list price and the offer price can give the Seller peace of mind.
- Getting creative! We have seen Buyers offering contracts utilize creative perks such as private yoga or catering. Consult your attorney on any out of the box ideas, just to be sure.
Keep in mind that the Seller’s “wish list” are requests, not requirements, and none of these tactics should be employed if you, the Buyer, are not comfortable with them.
…Finally, be aware of the psychology of the situation. Once your offer is accepted and the rosy glow of the win wears off, sometimes the reality of purchasing a home and the dollar amount you are spending to do so. It’s best to feel solid about any extras you are offering.
The only way to navigate through a multiple offer situation is to work with a Realtor whose experience has been tested in competitive markets, such as Maplewood, South Orange, and Montclair. Good luck and let us know if you have questions!