The boom in the Houston real estate market is resulting in the increasing likelihood of multiple offers on properly priced Houston real estate listings. This is every seller’s dream, but if you are one of the Houston real estate buyers bidding on a real estate listing, it’s important that you don’t allow it to become your nightmare. Don’t panic when the seller asks for your Highest and Best Offer.
Preparation is the key to keep the specter of competing offers on Houston real estate listings from upsetting your home buying prospects. Preparation starts with assembling a strong financial package. If your target property attracts multiple offers, you want your offer to stand out. By the time you learn that there are multiple offers on a real estate listing, it’s already too late to begin putting your offer package together. You should already have your mortgage pre-approval in hand before you even find a property. Almost all home sellers expect a mortgage pre-approval letter or proof of funds financial statement to be submitted with the offer.
When it comes to making the offer itself, lengthy Option Periods, Financing Contingencies, and expensive seller paid home warranties, will protect you from unforeseen problems. However, when multiple offers are on the table, the fewer contingencies and seller paid items the better in order to get your offer accepted by the seller. Having the seller pay for some of the buyer closing costs will reduce the cash outlay for buyers, but seller paid buyer closing costs reduce the net sales price to a seller and will reduce the chance of your offer being accepted.
Many of our real estate listings have received 5 to 10 offers in their first few days on the market. This is also a common occurrence when working with buyers on other real estate agent’s listings. A buyer in the current Houston real estate market has to be prepared to act quickly and knowledgeably.
You can be creative in your offer, by offering to reduce the seller’s closing costs by picking up escrow fees, HOA transfer fees, and or title insurance policies. Offering the seller a few additional days to move after the closing without seeking financial compensation in return is desirable in an offer on an occupied home. This is called a Seller Lease Back Provision in the Texas Real Estate Earnest Money Contract. When you know your bottom line, putting together your Highest and Best offer is easy and your less-prepared competitors are more likely to throw up their hands and give up.
When multiple offers on a Houston real estate listing occur, it’s possible that someone is going to bid more than the home is really worth. If you and your real estate agent have done thorough research and know precisely what the property is worth in today’s market, that won’t be you. It is better to walk away from a property, than pay more than the home is worth. That being said, many prime real estate listings are selling for substantially over list price. Right now, home prices in some neighborhoods in the Greater Houston area are rapidly appreciating.
Give Kevan Pewitt a call when you are ready to get started on your next home purchase in the Greater Houston area, but don’t wait too long or that house will be sold.