How Home Buyers Are Coming Out Victorious In Today’s World of Multiple Offers


by Charles McShan





Hello to everyone, This is Charles McShan with Century 21 Universal wishing everyone a belated happy new year. This blog post is “How homebuyers are coming out victorious in today’s world of multiple offers. Yes, the world has changed from a few years ago when a low ball offer might have proven successful in a buyer’s market. But, before we get into the main points of this article, let’s do a quick review of the last two months. Just before the Thanksgiving weekend, we as a country thought we were rebounding from the delta variant of the coronavirus when out of nowhere came the omicron variant. His variant has moved quickly and fast throughout the world, and once again, the medical field is in crisis. Throughout the past holiday season, people traveled throughout the country and earth, and the virus traveled with them. Enter the new year of 2022, and schools nationwide decide whether children should be in school or participate in online classes. Vaccination mandates are in place, and in many places, you will have to prove that you are vaccinated before they will allow you inside their homes of business. There is also push back against the mandates from certain groups. Inflation is also running ramped. Will all these factors affect the nature of Real estate like it did in 2021? Only time will tell.

Last year, the real estate industry underwent many changes because of the coronavirus, low inventory of homes, and other contributing factors. Because of the low housing inventory, the homeowners were in the driver’s seat. A few years ago, as I just wrote, you could lowball on an offer, and it might have proved successful due to the glut of homes on the market at that time. Today, if your home is up to date and priced right, you will receive multiple offers, sometimes 10 to 30% over the asking price. People who offer up to 30% over the asking price are usually cash buyers. When those home buyers offer that much cash, those homes will sell quickly. So, where does that leave homebuyers looking to purchase their home through the mortgage process? That is the topic of today’s post.

I have had clients say to me, “I am sick and tired of being out-bided. I Want to offer 20% over the asking price to acquire a home. Say to them, all well and good if you are paying cash, but how many people out there can put thousands of dollars on the table. As they say, cash is king, and those who can pay cash will be successful. Unfortunately, they have no one to answer if the market turns four years down the road, and they are upside down like many were a few years back. Most homebuyers need to take out a home loan, and the appraisal process will not allow us to overbid a home. Why not? Let’s review the Appraisal process, and at the end, you will see why you cannot overbid a house when using a mortgage as your collateral.

Steps In The Appraisal Process!

A year ago, I wrote a blog post entitled “Steps to homeownership.” I went thru every step of the process in detail, and if you wish to read it, it is a 4 part series located real estate information section our my blog post. Most of the steps remain the same. You first went out and got preapproved for a certain amount of money; you found the home of your dreams., made an offer either under, at, or slightly above the asking price. Then the negotiations would begin. Today we are in a different world. The coronavirus pandemic, combined with the shortage of homes for sale on the market, has resulted in multiple offers and bidding wars. Some homebuyers are tired of losing out in this process. One homebuyer told me I would win in the next round. I will outbid everyone else by offering 30% over the asking price. As a real estate agent, I would say no to that request, but the client is stubborn and will not take no for an answer. Make the offer anyway they demand.

Here is how that scenario will play out. First, the home inspection will go well, and now the loan department has started processing the loan lenders hire an appraiser to go out to the property and determine how much the home is worth. To get the words straight from the horse’s mouth, here is what the Appraisal Institute of Chicago says “Property appraisals are performed for a variety of reasons including mortgage lending purposes, tax assessments and negotiations between buyer and sellers.”Before coming to the property, the appraiser will gather all pertaining information from MLS data, public, and property records, along with surveys, plats, and aerial maps. They then go to the home site and verify the complete living area foot by foot, along with the floor plan.

They conclude the process by searching for comparable properties in the area in the same price range and size to see what those homes sold for. Next, they check the surrounding areas for the schools, parks, highways, railroads, and any environmental hazards. They then turn this report over to the party who ordered the appraisal, the lender. During the height of the coronavirus, many appraisers would do an external drive bye of the property. For safety reasons, many did not go inside the home. Will appraisers return to that because of the Omnicom virus? Only time will tell. In your case, they went inside and surveyed the entire property inside and out.

Let’s say the home’s asking price was $375.000; you offered to pay 11% over the asking price, which would be around $11.250, totaling out to $386.250. A competent Real Estate Broker will know that deal will not fly and would have told you so. But you are headstrong, so here is what will happen next.The loan officer or the underwriter will read the appraiser’s report  then contact you and inform you that they will not give you a mortgage on a home because $386.250 is way over the home’s fair market value. You are now disappointed and mad at everyone. Why did they reject it you ask?

They rejected it because it was their money on the line, not yours, and they were not in the business of losing money and making bad deals. If you want to pay cash for an, overprice that is your business, but you will not get a mortgage loan for an overpriced home. There is one bright spot to this story. Once that appraisal price is found out everyone will now know the fair market price of that home. If  the homeowner’s asking price is too high; they will now have to bring the price down and renegotiate with the homebuyers. You still might be successful If  you do a backup  offer if the orginal deal falls thru and they go to plan B there you are.

Where Does That Leave You!

That leaves you starting all over with nothing to show but a waste of time. In a bidding war, a homebuyer with a loan will not be able to complete with a cash buyer who really wants that home and will go out all out to get it. Th t is the main drawback of low inventory. So where does that leave you, the homeowner? Yo  are still in a good situation. He e are seven things you can do to improve your chances of buying a home in a seller’s market.

1:You have your preapproval letter; you have your down payment along with money to cover the closing costs.

2:When you find the home that has the majority of needs and features, you make not only an offer but the best offer you can. Th s will show the seller that you are not playing games but are serious about the property.

3:When you are up against multiple offers, a way to get the upper hand is to have as few contingencies as possible but beware, this can be tricky. Yo  do not want to be paying thousands of dollars in-home repairs along with a mortgage.

4:Have your real estate broker communicate with the seller’s broker and see the owner’s plans for that home. If  you can make your offer stand apart from the rest, you could gain an advantage

5:The main purpose of this blog post was to steer clear of a bidding war. Ev n if you have fallen head over heels for that property, keep your emotions in check. Do not overbid. If you do, you could put yourself in a financial bind, develop buyer’s remorse, and blame everyone, including your realtor. Dr w your line in the sand and do not cross over it.

6:Going back to the appraisal. We talked about if the appraisal came in too high. Yo r lender will not allow you to overpay for an overpriced home. Bu  what if the appraisal comes in lower than the buyer’s original’s asking price. Th n the buyer must put down more on the down payment, or the seller must agree to sell at a reduced price, and in this climate, do you think that will happen?

7:Let’s say you gave it your best shot, but the seller chose to go with a different buyer. Do ‘t start crying, have your agent secure a backup position. Th s means if the first buyer deal does not go through, you are next in line.

The Purpose of this Blogpost!

The purpose of this blog post was to help homebuyers in their quest to purchase a home. A  ome is the highest form of investment a person can have. A  omebuyer must have a licensed professional representing them in that task. In the scenario I wrote about at the beginning, where the buyers say I will offer 30% over the asking price, the professional real estate broker would say no. Th t deal will not pass the appraisal process. La t year, I decided to improve my skills for representing the homebuyer. As a result, I received my Accredited Buyer’s Representative designation or ABR for short. It is essential more now than ever that a real estate broker understands the buyers’ perspectives, preferences, and limitations. Yo  must also understand the generational differences of people of various ages. Ea h generation will do and react to things differently from the next age group. Th  classroom lectures, the reading the testing all were intensive. Bu  I pass the course. I  ill discuss this subject in later posts, but for now, I will enclose a downloadable infographic pamphlet at the end of this post of what an ABR specialist does.

This blog post is mainly for homebuyers. Ho ever, I must now address the homeowners since I bought out that I took designation continuing education classes to help homebuyers in the above paragraph. Ma y homeowners weathered the storm of the coronavirus these last two years. On the other hand, many homeowners did not keep up with their mortgage payments due to job loss and other factors. So e, because of forbearance, were able to catch up with their back payments. Bu , sadly, others could not choose not to pay their mortgage note. If it hasn’t happened yet, they will either soon place their homes on the short sale market or be forced into foreclosure. Sh rt sale market. Fo  those homeowners, if they have not as of yet had a final judgment or a sale or auction date handed down to them from the holder of the banknote, they still have a chance to sell their home and avoid a negative mark on their credit report along with the court, legal and miscellaneous fees. So I say to you today; I can help you.

Back in 2008, at the height of the short sale crisis, I enrolled and passed a “Certified Distressed Property Expert” course or CDPE for short. Th oughout the country, Real Estate Agents/Brokers with this certification assisted thousands of homeowners to sell their homes via either short sales or the foreclosures process.CDPE designated agents are known throughout America. La t year I renewed my license after taking an updated course. Ad  to that; I also enrolled and passed the Short Sales and Foreclosure Resource or SFR for short. Th s class was sponsored and endorsed by the National Association of Realtors. Bo h these designations allow me to understand and navigate thru the short sale and the foreclosure process to the benefit of my client.

Now going back to the homebuyer. Lo  inventory and homeowners stuck in their homes results in a double whammy for homebuyers today. Ma y homebuyers will have to rethink their choices of neighborhoods, cities, towns, or even states. Ev n if the housing market crashes, that crash will not bring home prices.;.The majority of homeowners in trouble today are not upside down a few years back. Th re are short sales and foreclosures on the market, and there will always be. Wh t will happen is home prices in 2022 will continue to rise, and guess what else will start rising soon?. Yes, Interest rates will start rising in late spring or early summer. So if you are waiting for that market crash to buy a house at a bargain price, you will lose. If you read the articles I post on my Facebook business page, you will see that I address that subject a lot. Th s is the time to buy. So here is another incentive for you renters to consider. bu ing a home this year.

Chicago and the surrounding towns, villages, and counties have suffered great financial loss due to the coronavirus pandemic. Th se government agencies will have to raise property taxes to pay their bills. Ho eowners will have to pay their fair share. Re idential landlords will not be left out. Th y will not eat these costs; they will pass them down to their rental tenants. If you are single or married with 2 to 3 children regardless of age and a renter, you have at least a three-bedroom unit.3 years ago, a three-bedroom rental unit cost around $1.200 to $1.500.Because of the virus, job losses, and the moratoriums placed on evictions in 2020/ 2021, many renters could not or would not pay rent. Th t caused many landlords to raise the credit score to around 700 to qualify, and they followed that by raising the rent. Ma y three-bedroom units in early 2022 start at $1.700, and depending on the area in Chicago, they exceed $2.200 a month. Wh n lease renewals start in late May or September, those prices will continue to upward. Th t is the new normal today. Fr m $1.700 to over $2.300 is what many people pay on their monthly mortgages. So if you are paying that much money to rent, you should use that money to benefit yourself and not a landlord. Ma y people this year will make that choice to buy and stop renting. Wh t about you?


Well, that is it on that subject of how homebuyers are coming out victorious in today’s world of multiple offers. We also covered the steps of getting to the closing table in times of multiple offers. We talked briefly about homeowners who need help selling their homes, and we talked about the certifications courses I took and passed last year. I  ill close by talking a little bit more about myself. My office is located at 7300N—Western Ave in the West Ridge area of Chicago. My travels take me near and far from Round Lake to Chicago Heights, Warrenville to Gurnee, and of course, every part of the Windy City. It s cold outside, but the housing market is still warm. If you have any questions about the housing market, I am here for you, whether you are a homeowner or a home buyer. Al  of us need a place to come home to where our family can feel a measure of safety and comfort. Al  of us want to lay our heads comfortably when we sleep. I  ant to be that person for you to achieve that. A  ew years ago, I coined the phrase buyorsellchicagoareahomes. Th t was my motto then, and it is still my motto. My Facebook business page has countless articles on how homebuyers can succeed in today’s market as well as helping homeowners find buyers for their properties. Th nk you for reading this blog. I  ope you found it informative. I  ope to hear from you soon and stay safe in 2022.

Charles McShan


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Website  https://wwwcharlesmcshanchicagolandrealtor.com


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