Competing Offers

Real estate in any region is rarely in what is referred to as “equilibrium.” Equilibrium states that neither a buyer nor seller has the upper hand in negotiations due to a balanced real estate market. Often times, it is either one or the other. In a buyer’s market, the buyer has the upper hand. A buyer’s market is noted as longer selling times for homes, falling prices, or an otherwise depressed housing market for any number of reasons. Homes stay on the market longer than usual and sellers typically sell a home for less than they hoped, if at all.

A seller’s market means the sellers hold all the good cards. Home values are going up, sellers get the original list price they’re asking for, and overall the real estate market is on a tear. Well, maybe not always on a tear but doing very well, thank you.

So when you’re the buyer, what can you do when you’re competing with other buyers?

Competing Offers with others

Competing Offers: Missed Opportunity

Let’s say you’ve been shopping for a home for the past few months and it seems sellers aren’t really into negotiating. The homes in the area where you want to live don’t stay on the market for very long and the “Sold” signs seem to pop up just a little too quickly.

Yet one weekend as you’re driving around the neighborhood you see someone planting a “For Sale” sign in the front yard. You quickly pull in and talk to the agent a bit who gives you the low-down on the home and invites you in to take a closer look. It has everything you want. Three bedrooms. A newly renovated kitchen. Wood floors and even an extra area you can use as an office. You ask the price and you decide that, while it is on the high side, you’re going to make a full price offer. You sign the sales contract and walk out the door, only to walk past two other people who want to look at this newly listed property as well.

You go home that night and think you’ve finally found your home in the area where you want to live and while the sales price wasn’t exactly what you wanted it’s close. And as you fall asleep you begin dreaming about new furniture, decorations and new landscaping for the home.

The next morning, you get a call from the agent you met. Your offer was declined. The home went to someone else.

competing offers with other buyers

Sweetening the Offer

Okay, so what happened? You made a full price offer and you were turned down! You call the agent again and ask what the property sold for and the agent tells you it was $5,000 below yours. But the agent has other properties you might be interested in.

You offered more and lost. Why?

When you’re competing with others, especially in a seller’s market, it’s a lot more than just making an offer. There are other considerations that must be addressed. You need to understand where the seller is coming from, not just the final number.

For example, when an offer is accepted by the seller, the home goes into a “Pending” status which means there is an accepted offer and the buyers are arranging financing. Should the buyers not get an approval from their lender after submitting the sales contract and loan application, the home goes back on the market. The time frame of making an offer to getting a loan application approved can be two or even three weeks long. That’s how long the seller has temporarily taken the home off the market. Should the buyer’s financing not go through, the sellers have to put the home back on the market and start the process all over again. That can also be a red flag for future buyers when a home is taken off the market then put back on.

Is there something wrong with the property?

The inspector found some structural damage? To avoid such unexpected events, sellers want to see the buyers have already applied for financing and have been approved. All that’s needed is a property.

The Pre-Approval

When competing with others for a property, if you already have your financing lined up along with a letter from a lender that proves it, you’re already a step ahead of your competitors. That’s probably why you lost the last home even when your offer was $2,000 higher than the winning bid. You didn’t have a pre approval from a mortgage company. Sellers might accept an offer $2,000 lower on a home listing for $400,000 if there is an assurance the buyers will have no problems getting their loan approved as they only need a property.

Your pre approval validates your financial position, employment history and credit. When you first submit a loan application there will be no specific property listed but the lender processes the application as if you did. Your credit report will be pulled and credit scores recorded. You will provide your most recent pay check stubs and W2s or two years of federal income taxes if you’re self-employed. Your bank statements will be sent to the lender to show you have sufficient funds to close. When all someone needs is a property, the sellers are confident there will be no problems. After all, most sellers also have another property they’ve made an offer on and need to sell their existing home for funds needed to buy the new one.

There are other things you can do that can help your standing with the sellers but none more than having your financing already lined up. In fact, most real estate agents won’t even let you in their car unless you’ve already spoken with a lender and further still won’t make an offer on your behalf without a pre approval letter attached. If you know you’re in a seller’s market, the pre approval is your secret weapon.

Our offer acceptance strategies are designed to tip the scales in your favor. We provide property and offer-specific pre approval letters and will oftentimes personally reach out to the listing agent by phone on submission of your offer to proactively represent your ability to qualify and perform on your purchase transaction.


highly recommend Chad and his team. They were always available for any questions, concerns etc. we had. The process to close the loan went super fast. Chad and his team always went above and beyond. The customer service was the best! I will definitely recommend to all Thank you again for everything!

Everything about our transaction with this lender was perfectly explained to us, easy to do, and they were able to help us get our loan closed ahead of schedule. It was a perfect 10 and we couldn’t have been happier with the whole thing

Outstanding experience

I was referred to Chad by my Realtor for a purchase of a new house. The experience with Chad and the team (I mainly worked with Juliann) was nothing short of outstanding. From start to finish there were always quick to respond and when needed, notify me of any new documentation that was required. There were very helpful explaining to me the pros and cons of different financing options as well as some other loan related issues, such as termite clearance outside the purchase contact and septic tank certification process. Overall, very knowledgeable and processional team. Loan preapproval was done in a single day and loan documents were ready for signing in 21 days, which was 9 days ahead of schedule. That never happened to me before.

I hope you enjoyed reading this article. It's my goal to keep you updated with the latest real estate mortgage news. I'm proud to provide you with 100% original and unique content. Subscribe now to get high quality real estate mortgage content and articles delivered directly to your inbox. Chad Baker is Regional Manager for RPM Mortgage. Chad is consistently recognized in the top 1% of mortgage originators in the United States 2011-2016. Got a question for Chad? Call (858) 353-8331 or submit your question online