If you are one of many buyers fighting to buy the same house, then how do you determine the winning offer? A Fairfax VA home listed at $200,000 will surely sell for more than that in this case, since everyone wants it. So to beat out other buyers while not overpaying, how much more should you offer?
This is very dependent on the type of market and the market value of the house. You will need to perform a market analysis in order to present the best offer for both you and the seller. For example, if you went in with $215,000 and the highest other offer was only $205,000, then you’d have overpaid by $10,000. You won’t know this since the amount the other offers have are not disclosed to the competing buyers. In fact, buyers will not know how much the other buyers are offering since it’s a sealed bid situation.
So to save yourself from overpaying while keeping your offer competitive with others’, you add an escalation clause or escalation addendum with your offer. This clause will typically say:
“If there are any other offers, my offer is for $200,000 (list price). However, I will raise my offer by $500 (or any amount you choose) above any other offer presented at the same time as mine. I’m willing to go up to a maximum of $210,000 (as an example) in increments of $1,000. But, Mr. Seller, you have to prove to me there’s another offer, and you have to prove to me what the offer is, if you’re going to utilize this escalation clause.”
This is paraphrased just to give you an idea of what the concept of the clause is. Different jurisdictions will have different laws and customs that govern the specific verbiage for your escalation clause.
To explain, this means that if the seller responds by saying you’ll have to buy the Fairfax VA home for $207,000, the seller has to prove that there was an offer for $206,000, which is what activated the escalation clause and the $1,000 escalator. This is a bit similar to bidding in eBay by protecting you from overpaying as in the first example.
Though some banks don’t want to do this with bank-owned properties, it’s accepted in most markets and you can have your bank or your agent do it effectively for you. This is really the smartest way to bid and negotiate on Fairfax VA homes for sale with multiple offers.
Thierry is a Real Estate Agent at RE/MAX Premier, and Host of Talk Radio’s, “Inside Real Estate”
Thierry & his team Guarantee a $25,000 minimum savings for Northern VA Homebuyers by applying his unique insider techniques & strategies that he discovered throughout 8 years of exclusive Radio Interviews & Insider Access to wealthy Real Estate Insiders, Investors & Top Industry experts.
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