What can you learn when you lose out in multiple offers?

Target with keys to a house in the center - What can you learn when you lose out in multiple offers?If you lose out in multiple offers over and over, you’re not alone, but as prices rise, this isn’t a good pattern to be in. What can you learn from it?

Silicon Valley home buyers can have vastly different reasons for getting their offers rejected.

  • For many, the challenge is having a small down payment.
  • Others are very indecisive (and can’t decide fast enough, or cannot really commit enough to write a strong enough offer).
  • Some may have unrealistic expectations.
  • Some pride themselves on “being conservative” and routinely under price their offers.

Below we’ll go over the main issues, what you can learn from losing, and finally, a strategy to pull you out of multiple offers.

Small down payments and the competitive disadvantage

Having a less than 20% down payment may get an offer eliminated off the bat when there are multiple bids. The reasoning has to do with confidence that the bank will fund the loan and not get cold feet. The larger the down, the more secure the loan appears. When there’s more than 20% down available, the buyer appears more able to manage an appraisal shortfall, too.

FHA home buyers have the biggest challenge, for reasons explained previously. Those with 20% down payment have a really reasonable loan situation, but the trouble is that many other competitors do, too.  With rising prices, appraisals are often a problem – and 20% down usually won’t solve it.  So the more cash, the better, and cash is still king.

All cash offers

Having 30% or more will usually overcome appraisal hurdles.  But those ubiquitous “all cash offers”, which comprise about 15% of all Santa Clara County home sales right now, will usually trump any other bid IF the price is attractive.  Don’t be discouraged, though, as sometimes the all cash offers are the lowest offers with multiple bid situations in the San Jose area.

If you lose out in multiple offers for any other reason besides the down payment

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