A multiple-offer situation happens when you have a bunch of people bidding to buy the same property.
Today, we are 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.
This is a non-technical guide to making your contract stand out.
So, if you’re not super technical, you’ll love the simple steps in this guide.
By the way, if you’re in the middle of a multiple-offer situation and need some immediate advice, our Brisbane mortgage brokers are here to help. We can give you some tips to succeed and help you with arranging finance if needed.
Let’s get started.
1. Ask For The Multiple Offer Form (in QLD)
Sometimes, when a Real Estate agent says, ‘There is another offer on the property ‘, you just want to roll your eyes…
While 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 Real Estate Institute of Queensland (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 wants 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. In contrast, 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 time frame is and matching your offer around that.
In a multiple-offer situation, a settlement date that aligns with the seller’s intentions can be worth more than an extra few thousand dollars in terms of securing the contract for you.
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.
Read More: 6 Tips to Negotiating the Contract Price with A Real Estate Agent
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, put together your loan eligibility or apply for a pre-approval to help you go head-to-head with other buyers. However, A GREAT Mortgage Broker will help provide negotiation strategies and techniques to win when buying a home. They will also make sure you get the right pre-approvals.
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 who understands the difference in pre-approvals and makes 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 this could reduce your finance to 5 days. This is only achievable if your mortgage broker has arranged a proper pre-approval in time.
6. Drop The Building & Pest
As with the Finance Date, the Building & Pest date can make or break some contracts, especially in a multiple-offer situation.
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, we are not saying you shouldn’t get a Building & Pest Report (in the situation above, the buyer was a builder and understood the risks), but if it’s 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
Most contracts offered on homes are rounded to the nearest $10,000.
A study on real estate prices found that homes 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 in a multiple-offer situation 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!
(It is also 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.
It’s important to remember property can be deeply emotional…
The seller 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 buyer’s.
It might be a long shot, but still, it could be the cheapest way of making your contract stand out! In a multiple-offer situation, anything to give you a potential edge is worth trying.
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 she took the lower offer.
9. Don't Get Caught Up
Fortunately, you are not buying at auction, so 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, real estate agents are trying to use your own FOMO to bid you up or make you feel compelled to make an emotional decision. A multiple-offer situation adds more pressure and can easily overwhelm you.
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 over the last three to six months. This will help guide you in understanding what the owner is looking for.
Bonus: 2 Common Ways Of Making An Offer In Queensland
In Queensland, there are two common ways to make an offer on a property. The first way is by sending an email to the agent or filling out an offer form. The second way is filling out a completed contract of sale with your offer. Let’s go into a bit more detail about them.
1. Sending email or completing a 'making an offer form'.
This is an informal written offer. Basically, you’re writing an email to the agent, lining out the details, or filling out what you’d like to make an offer on this property. Generally, it’s going to include the price you’re offering and any conditions like subject to building, finance, etc. The nice thing about this method is it’s pretty straightforward and a lot less formal. You’re not signing anything – you can change your mind and walk away because you haven’t really bound yourself to anything. The email shows your intent, but it’s not legally binding until you put it on a contract of sale signed by both parties. It’s pretty much just a proposal for the seller to consider.
2. Going straight to that contract of sale and submitting a formal contract
This is where it gets more scary because this is a formal written offer, and you’re going to have to fill out a standard contract of sale. It’s often referred to as an REIQ contract in Queensland, with your offer details and signature. What you’re doing here is putting all your terms in writing up front on the contract, and it’s live – you’ve signed it, and this is why a lot of agents are going straight to the second method.
For a lot of first home buyers, unless you’re a lawyer, we generally recommend you get a solicitor or conveyancer to check the contract before you sign anything – this can work against you on the weekends if you’re making offers. So try to sit down with a conveyancer up front if you’re looking at places. Get them to send through a blank contract of sale. Chat to them about any terms or conditions you might want to put on there because you don’t want to miss out if they’re doing ‘best before’ offers before 5:00pm on a Saturday.
Next Steps And Settling Your New Home
Our team here at Hunter Galloway is here to help you buy a home in Brisbane.
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 you anything).
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