So you have found the ONE- the home you can see yourself living in, where you will entertain your friends and family, where you will labor over improvement projects and celebrate holidays. Wait! Someone else has found it too. Even though it is a buyer's market in many respects, some areas and price ranges are seeing multiple offers on homes.
If you are going to be searching in a high demand area or price range, you need to take a few key steps before you look at homes to give yourself the highest chance for success. First, get pre-approved for a mortgage. By pre-approved I don't mean that you have just ran some numbers on an on-line calculator or talked to a relative who is in the banking industry. You will want to choose a reputable lender and do a mortgage loan application. To identify homes to consider, you need to know what your price range is and what loan programs you are qualified for; some properties are not eligible for all loan types. By figuring out the financing first, you to be ready to act quickly if you find a home and another party is interested.
Next, make sure you are working with an experienced Realtor that is familiar with your area and price range; you will be relying on their expertise to write a competitive offer. Buyers often do not take this step seriously enough. Buying a home is usually one of the largest financial transactions of your life. Take the time to find a trusted professional to assist you.
If you have viewed a number of homes and find one that really stands out in price, location, quality or features chances are someone else will notice too. You may have pictured yourself negotiating the deal of the century on the home but if another party is interested, you will need to adopt another strategy if you want to make it yours.
Typically if there is more than one interested party in a home in Minnesota, the listing agent will set a deadline for buyers to submit their "highest and best" offers. "Highest" is obviously referring to the highest price you are willing to pay for the home. Think this over carefully. While no one wants to pay more for a house than what it is worth, each buyer may have a different sense of the home's value. Your best bet is to consider comparable sales and decide what you are willing to pay. Homes that sell in multiple offers may be priced lower than the competing homes to ensure a quick sale. They very often sell above the listing price. You may have no idea what the other parties are offering which is frustrating to many buyers. Remember, the other parties are in the same situation. Submit an offer for the most you are willing to pay; another way to look at it is the amount that if another party is willing to pay any more than you, you can accept losing the home and continuing your search.
In writing your "highest and best" offer, "best" refers to the terms of your offer. To compete with another offer you want to have terms that would be desirable to a seller. For example, if the home is vacant, the sellers might prefer a quick closing date. Other areas the seller will compare between offers are seller concessions, contingencies, financing and earnest money. Your Realtor will be able to advise you on presenting the best possible offer.
Remember, you are searching for a place to call home. Don't get discouraged if you end up competing with other buyers for the right place. That just means you have good taste in homes!