Multiple offers are back! That’s an exclamation, not necessarily a celebration, but however we feel about it… it is happening. With the low inventory over the past few months we’re seeing buyers fighting over limited options. As someone (David) who recently went through our own multiple offer purchase, I wanted to share some tips to help you prepare for a potential multiple offer situation by reducing or removing subjects in advance safely.
1. Financing Preapproval: We can’t stress this one enough, you absolutely must, must, must be preapproved before submitting an offer, especially in the context of multiples. Yes, it’s the most boring element of the real estate purchasing journey, but it’s also one of the most essential. If you’ve been preapproved then your broker has already taken care of your side of things – your income, your debt, your credit history, etc. All that’s left is the home itself for the lenders to clear, which should be turned over in a day or two, rather than the 10-14 days often permitted in a quieter market. A preapproval letter will also help show that even although you have a financing subject, you are prequalified and good to go!
2. Financing Preapproval (On Steroids): Want to drop the financing subject entirely, rather than just shorten it? Some of our mortgage partners have reached out to us to offer the option of running an offer past a lender days before submitting it. If there’s an offer presentation set for Monday evening, and you saw the property on Friday or Saturday, we could have you as close to an unconditional approval as possible by using this unusual technique, enormously strengthening your offer in the eyes of the sellers.
3. Pre-Offer Inspection: The other scary subject for sellers is the dreaded home inspection, but that subject can also be taken care of in advance by arranging a home inspection prior to the offer presentation, allowing you to remove that subject too. Yes, it’s an investment of around $500 in advance, and you may still be beat on offer presentation evening, but by removing that subject you’ve massively increased your chances of a call back to see if you can come close to matching a similar offer that includes the home inspection subject. If it was one of our listings, and they removed the financing and home inspection subject, I’d place the value on that around $5-10,000!
4. Document Review: We always try to post the property disclosure statement, title (and title review), and strata documents on our listings from the day they hit the market. We believe that’s one of the signs of a professional agent, to have everything ready to go on the day the property is listed. If we’re looking at a listing with a listing agent that’s similarly inclined, and you’re interested in writing an offer, we have to get our reading glasses on! By doing our due diligence prior to offer presentation we may be able to remove those subjects in advance too.
5. Insurance: The insurance subject is the final of the standard subjects we usually see in offers, and historically it’s been of fairly low concern. With changes having occurred in the condo insurance world in particular though we’re ensuring our clients are adequately protected by visiting an insurance broker with the feature sheet and even their home inspection report to ensure they have a reasonable expectation of what insurance needs they may have in the event of a successful offer.
Following the above steps definitely requires a lot more effort, both from our buyers and ourselves, but it puts them in a position to write a potentially subject free or reduced subject offer without taking unnecessary risk. If you’d like to discuss these tactics more, as always, don’t hesitate to reach out – we’d love to hear from you.