Supply is down in Phoenix which, based on the natural laws of supply and demand, would indicate that pricing would increase. Check. Demand, at the same time, has increased as more and more people who were thinking about buying a home are getting out and getting serious about buying. Check.
The simple strategy I’m about to show you for buying a home when there are competing offers is effective, but even in a market like this, can make no difference when weighing the strength of an offer.
The strength of an offer is important to a seller, as one offer may be higher than another, but weaker because the buyer is opting to fund with a loan, whereas the competing offer may be lower but have terms that are more favorable, such as a full cash purchase. There are a lot of cash buyers who are submitting offers sight-unseen (meaning they haven’t even looked at the house) with terms that waive appraisals and inspections that are making it difficult for the traditional buyer to buy.
There is an escalation clause that you can write into your contract that goes something like this:
“Buyer agrees to pay $1000.00 more than the next best offer up to, but no more than X dollars. Seller agrees to provide a copy of page 2 of the purchase contract of the next highest offer upon acceptance or this contract shall be canceled.”
Basically, what you’re saying is that you are willing to pay $1000.00 more than the next guy, but you want proof from the seller that there’s actually an offer that’s $1000.00 below your price so you know you aren’t being duped.
There’s much more that goes into the strength of your offer, but if you happen to be competing against buyers who have stronger offers (not necessarily higher offers) then the escalation clause may not be much of an incentive for the seller.