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If you're interested in a property in an up-and-coming area, it's likely other investors will be putting down offers, so what should you do?
Blogger: Steve Waters, director, Right Property Group
There's no doubt that the property markets in many of our capital cities are heating up, most likely due to the recent interest rate cut and the promise of more to potentially come.
While lower interest rates are a good thing for investors, of course it also reflects that our economy is a bit sluggish, but that doesn't mean we shouldn't make hay while the rate sun shines!
As demand grows, it's likely that the best properties are going to be attractive to more buyers, which often results in a multiple offer situation.
I know that many buyers get frustrated, and perhaps a little suspicious, when agents tell them there are multiple offers on a property that they fancy.
But the truth of the matter is, good property is always in hot demand from investors and buyers' agents who know what they're doing.
The key is to make sure you end up being the successful buyer or you know when to split when the numbers no longer add up.
It's important to understand that a multiple offer situation is usually real because agents can face significant legal consequences if they are telling a tall tale in an ill-advised attempt to increase the offer amounts.
When you're faced with multiple offers, you're probably past the point of too much negotiation, because you generally only get one stab at submitting your best and final offer.
It's at this point that you must keep your cool because you don't want to let emotion muddle up your thinking.
If you do, just like in an auction, then you could end up paying far too much for the property and you'll be left up the creek without a strategy paddle.
As we all know, investors make money when they buy, so you don't want to end up paying over the odds and cutting years off your potential capital growth returns.
Sometimes the best outcome is for you not to be successful and stuck with an overpriced property that will likely annoy you for years to come!
In a multiple offer situation you also need to be aware that price isn't necessarily the be all and end all of the negotiation.
As buyers' agents we try to learn as much as we can about the seller's circumstances so we can negotiate and make solid offers on behalf of our clients which will be attractive to the seller.
So, winning multiple offer tactics can include the reduction or removal of conditions, such as a fast settlement if the seller has already bought somewhere else and they want the money quickly so they can literally move on.
Other tactics to use include offering a bigger deposit, an unconditional offer, or perhaps waiving the cooling off period to show the seller that you're serious about buying the property.
Sellers generally will examine all of the terms and conditions of each offer before deciding to accept or reject any particular one, so the conditions (or lack of them) can make certain offers more eye-catching for reasons other than the proposed price alone.
As buyers' agents with decades of experience we understand what to do when offers become multiple because we recognise that we're not the only ones out there that can identify a solid investment prospect.
The key is to keep your cool, understand what to leave on the table and what to remove, and (just like Kenny Rogers sings) know when to fold 'em and walk away when the deal is no longer ideal.