What Can You Do In A Multiple Offer Situation

Depending on the activity in your local real estate market you may or may not find yourself in a multiple offer situation when buying your home.  Here on Florida's west coast we are seeing many hot buyers competing for the homes they want. When inventory is low (less home for sale) we have more home buyers active in the market than we have homes active for sale.  Right now in my local market we have about 7 home buyers for each home for sale and properly priced homes are seeing multiple offers for purchase.  When this happens you may make an offer that you think is fair only to find out you didn't get the house.  We understand that it's a frustrating situation but there are a few things you can do to improve your offers on future homes.  Depending on where you live, the process for buying your home and the contract used will vary.  I am going to base my suggestions on the Florida "As-Is" contract as that is the most popular contract used in our area. (for information the As-Is contract click here).

When you find yourself in a multiple offer situation the seller will be looking for the "Highest and Best" offer.  Keep in mind that sometimes the best offer is not necessarily the one for the most money but you will make to make your purchase price as aggressive as possible and it is not uncommon to offer more than the listing price.  Maybe you can't offer more than the list price or maybe you can't even offer full price due to how much of a home loan (mortgage) you are approved for.  What do you do? You should consult with your Realtor and you may hear them advise you to make the offer the best it can be in other ways than price.  The first thing you can do is increase your escrow or "good faith" deposit if you can.  Show the sellers you are serious and your putting your money where your mouth is.  A good rule of thumb with escrow deposits is that it should be approximately 2% of the purchase price.  This may be different in your market so rely on your Realtors advice. 

There are other items in your Florida real estate contract that you can use to improve your offer.  Your contract allows for an inspection period. The contract has a default limit of 15 days for inspections.  You may want to tighten that date up. Often times in our market we can get a home inspection completed within 3 days of executing a contract.  We advise our buyers to use a 7-10 day inspection period.  This shows the seller you are not going to waste their time and should you have an issue with the inspection you are going to address it with the seller in a timely manner.  The contract also allows for you to ask the seller for a home warranty. Use your judgment. If you can't make a strong monetary offer you may want to omit a seller paid home warranty from your contract.  There is also the difference between a mortgage pre-qualification and pre-approval.  The mortgage pre-approval is much better than the pre-qualification so if you have a pre-qualification you may want to get with your lender and provide the information needed to get you pre-approved.  I was a mortgage loan officer in the past and a pre-qualification is no better then a note from their friend saying they are ok to buy your home. 

You may be asking for the seller to assist in your closing costs. Should you be in that position in a multiple offer situation you may find it more challenging to have your offer accepted.  When you ask the seller to assist in your closing costs you are asking them to take money from the proceeds of their sale and credit it to you at the closing because you don't have the funds to close.  Even when making an offer that is not a multiple offer situation, asking for assistance with closing costs will always weaken your offer.  We would suggest you do what you can to avoid asking for seller concessions toward your closing costs.  This may mean you save up more money for your closing costs before you buy a home. 

We are here to help you in western Pasco county Florida.  Contact us with any questions or concerns you may have about the Florida real estate market.  

What is a Transaction Broker in Florida Real Estate?

Florida is one of those states where we have a great number of part time residents and many people who live here full time are from another state in the country so we get to work with people from all over the US and Canada. Often times we will not only explain things about the city or state to our customers from other states but we also have to clarify how Florida real estate law is different from other states. One big difference is that we are a "Transaction Broker" state. Let me state right now that a "Dual Agency" in Florida is Illegal. Only Transaction Brokers can work with both the seller and buyer in a transaction.  In order for your Broker to be a transaction broker, they must disclose and act in a Transaction Broker capacity with no fiduciary responsibility to the person or persons who they are working for. 

What is a Transaction Broker:

1. A Broker with a NON fiduciary responsibility to the customer and therefore can assist both the seller and buyer on a real estate transaction.
2. Must deal Honestly and Fairly. Customers are entitled to rely on any material statement related to the transaction by the licensee. 
3. Account for All Funds. Transaction Brokers and all Brokers and Licensees are required to follow the law regarding escrow deposits and commissions.
4. Use Skill, Care and Diligence in the Transaction. Your Transaction Broker and agent are required to facilitate your transaction with the highest level of professionalism and act legally and ethically. 
5. Disclose All Know Facts that Materially Affect the Value of Residential Property that is Not Readily Visible to the buyer. The person selling the home is legally required to disclose any defect of material fact that can affect the value of the home. This includes proposed changes to vacant land near the home, zoning changes, soil settlement etc... IF the Broker or Licensee know any material fact, even if the seller is refusing to disclose, the Broker and Agent MUST disclose the fact to the public. Keep in mind that your agent and Broker are not legally required to discover defects of the home. We rely solely on what the home owner tells us.
6. Present All offers and counter offers in a Timely manner. Unless a party has notified their agent in writing to anything otherwise, All offers, verbal or written are to be presented in a timely manner.
7. Exercise Limited Confidentiality. The main thing to know about this is that we cannot tell the buyer any information about the seller and we cannot tell the seller anything about the buyer that may put either party in jeopardy during the transaction. One great example to clarify this, if the buyer offers less than they are willing to pay for the home we cannot tell the seller that the buyer is willing to pay more than they are offering. 
8. Perform any duties that are mutually agreed to with the party.  Just to clarify, we cannot accept any duty that is beyond the scope of our limited confidentiality or beyond the scope of our license. 

Many people think that a Transaction broker is a "Dual Agency". It is Not. A Dual Agency  in Florida is Illegal and if a Broker is acting as a "Single Agent" for a seller, none of their agents may represent the buyer in the transaction unless the seller agrees in writing to change their brokerage relationship back to a transaction broker. The Broker and their agents cannot have fiduciary responsibilities to both the seller and the buyer as it would conflict with loyalty and confidentiality and full disclosure requirements of a single agent relationship.

In Florida, all real estate licensees are considered to be Transaction Brokers unless requested by the customer and a single agency or non representative disclosure is signed by both parties. 

Do not hesitate to contact me if you have any questions about Florida real estate transactions. If I do not have your answer, I will get it for you.