When you find a multifamily property that appears to be a great investment, your Silicon Valley REALTOR® will help you prepare an offer – but how do you put in a winning offer that sellers are ready to accept right away? This guide explains.
Making an Offer: How to Get the Multifamily Property You Want
First things first: You should have mortgage preapproval before you make any offer. Think of it from the seller’s perspective – you’re asking the seller to take the property off the market so you can buy it, and you need to show that you’re serious (and able to secure financing).
After you have mortgage preapproval, you should follow as many of these steps as are reasonable in your situation:
- Offer over list price
- Increase your earnest money deposit
- Ask your REALTOR to add an escalation clause
- Waive contingencies (carefully)
- Make a higher down payment
- Write a personal note to the seller
- Be flexible with your closing date
- Be willing to accommodate any seller requests, within reason
Here’s a closer look at each.
Tip #1 for Making a Winning Offer on a Multifamily Property: Offer Over List Price
Offering more than your competition is a great way to put in a winning offer – but be careful to avoid going too far over asking. Additionally, bear in mind that offering over list price could start a bidding war. If it does, don’t overspend just to “win.” Also remember the property must appraise for the purchase price, unless you pay “All Cash.”
Tip #2 for Making a Winning Offer on a Multifamily Property: Increase Your Earnest Money Deposit
Increasing your earnest money deposit – the cash that shows the seller you’re serious about wanting to buy – is a great way to prove that you’re ready for the seller to take the property off the market for you. It’s an extra measure of security for the seller, too, because if you walk away from the deal, the seller typically gets to hang on to your earnest money deposit.
Tip #3 for Making a Winning Offer on a Multifamily Property: Ask Your REALTOR to Add an Escalation Clause
An escalation clause is a note on your offer that says if anyone bids higher than you do, you’ll raise your offer by a certain amount (up to whatever cap you designate). Having an escalation clause in your offer keeps you in the game if other offers come in.
Tip #4 for Making a Winning Offer on a Multifamily Property: Waive Contingencies
Contingencies are conditions that must be met before you can complete a real estate deal. The most common have to do with financing, inspection and appraisal:
- The financing contingency says you don’t have to buy the property if you can’t get financing.
- The inspection contingency says that you have the right to have the property inspected by a professional, and if any issues arise, you may be able to back out of the deal.
- The appraisal contingency says that if the property doesn’t appraise for the contract price, you can walk away.
Talk to your REALTOR about waiving any of your contingencies – they’re there to protect you, so waiving them is only appropriate in a limited number of situations.
Tip #5 for Making a Winning Offer on a Multifamily Property: Make a Higher Down Payment
If you make a higher down payment, your lender’s risk decreases – and the whole financing process may go more smoothly. Sellers don’t want to risk you not getting financing, so making a higher down payment can increase your chances of submitting a winning offer.
Tip #6 for Making a Winning Offer on a Multifamily Property: Write a Personal Note to the Seller
Sometimes – but not always – including a note to the seller can put your offer over the top. Tell them what you love about the home and attempt to make a personal connection. Again, this doesn’t always work, particularly with multifamily properties, but it can. Talk to your REALTOR about whether you should include a personal note if you’re not sure.
Tip #7 for Making a Winning Offer on a Multifamily Property: Be Flexible With Your Closing Date
If you can close quickly, say so – and let the seller know you’re flexible enough with the date to meet his or her timeline.
Ready to Buy or Sell a Duplex, Triplex or Fourplex in Silicon Valley?
If you’re looking to start investing today, want to discuss your options, or are selling a duplex, triplex or fourplex in Campbell, Cambrian Park, Los Gatos, San Jose, Santa Clara, Saratoga, Willow Glen or another community in Silicon Valley, we’re here to help. Find out about our innovative marketing plans that can put your investment property in front of all the right buyers. Simply click here to set an appointment, call or text Debbie at 408-210-2400, or send an email to Debbie@PropertiesInSiliconValley.com.
If you’re looking for a new multi-family property for sale or another type of home, check out our links below:
Search Silicon Valley Investment Properties by Price