Beating out multiple bids

Flickr photo by A. www.viajar24h.com.

DEAR BERNICE: I can't speak for anywhere else in the country, but there are just no decent houses for sale in our area. We wrote a good offer on one house and discovered there were four other offers on the property. The owner wrote a counteroffer that was higher than the original asking price.

We didn't think we would have to pay more than the asking price to get the property. I've heard of people bidding up properties, but I didn't think it was happening in today's market. If we end up in another multiple-offer competition what can we do to make sure we get the property without overpaying? --Jeanette H.

DEAR JEANETTE: Many places in the country are reporting one to three months of inventory in the first-time-buyer price ranges. This is both good news and bad news. If there is little inventory in your price range that means that your market has probably bottomed and is on its way back up again.

There is no way to accurately gauge when the bottom of a market will occur. You can tell only in retrospect: If you're purchasing right now and there's no inventory in your price range, there's a high probability that you are timing the market almost perfectly. You may have missed the bottom, but you may not have missed it by very much. With today's low interest rates, and if you found the right property that you can afford, it could be an excellent time for you to buy.

Multiple offers can be tricky. Ideally, the listing agent will ask his or her manager to be present to make sure everyone is treated fairly. In the office where I worked, we had to have a manager present whenever there were two or more offers on the property. If the listing agent also had an offer from a buyer (a dual-agency scenario), the manager would assume the representation of the seller.

The listing agent would represent the buyer and would have no access to the other offers. If you were the agent representing the seller, you could not "shop" the current offers against each other. But, in general, the listing agent's goal is to help the seller get the highest possible offer so "shopping your offer" is often acceptable.

Because there is so much variation from state to state, make sure that you are working with a knowledgeable agent who understands what is required under local law. For example, my agent here in Texas told us we could consider only one offer at a time. We couldn't make multiple offers to multiple parties at the same time.

In California, we routinely issued multiple offers that had to be countersigned by the seller before they were finalized. In fact, we once had 52 offers on a single property. Everyone received a counteroffer and was asked to bring back their best offer. Needless to say, the property sold for well over asking price.

As a buyer, there are several things that you can do to maximize the chance that your offer will be accepted. When the market was extremely heated, it was common for desperate buyers to waive all inspection and loan contingencies. This is poor idea unless you have the cash in the bank to pay for the house and you have inspected the house prior to writing the offer. ...CONTINUED

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