It’s every seller’s dream situation: receiving multiple offers on their property, and having to choose the best one.
It does happen. In every city or town.
No matter if it’s a “sellers market” or a “buyers market”.
If your home is in a location where people want to buy, and it’s in a condition that people feel the price is good, you will be one of the lucky one’s in this situation.
Let’s start with a question: Do you know WHY you have recieved multiple offers?
It’s Simple. Your home is priced right for the market.
Not to high, not to low- but just right!
How do we know this? Because there are ALWAYS buyers looking in your neighborhood. And when a home comes on the market that is priced correctly, they will jump on it. RIGHT AWAY.
So don’t think that you are leaving money on the table or that you priced it to low. That’s just not the case.
The best part of receiving multiple offers (besides that your agent actually set you up for the best date of your life!) is that you have achieved your goal- you have offers! And now, with multiple offers- YOU HAVE MORE OPTIONS.
Navigate A Multiple Offer, Step #1: Analyze YOUR Current Situation.
So before you look over the offers with your agent, the BEST THING you can do is get a picture of your current situation first. You and your agent need to determine the following:
- What will your costs to sell be? (Lien and mortage payoffs, commission and marketing fees, closings costs, lien searches, taxes, etc)
- What is your TIME frame? Need to be out ASAP? Need 6 weeks to move? Flexible when you move?
- Do you have another home to MOVE to? Do you already have your next pad picked, or do you need to start looking and need time to buy?
- How are you purchasing that next home? Can you do a simultaneous close? Do you have the funds to close the new one first and then move out of the old one? DO you need the funds from this sale to close on the the new home?
- What condition is your home in? Are you aware of potential issues? Have reservations about items that may affect inspections, appraisals, or insurance needs?
- How is your home prices next to the competition? Will it appraise? Are there other sales to support the price of the offers you received?
There are external factors, outside of your home and the offers sitting in front of you, that you need to consider as well:
- How much competition is out there?
- Is your home a premium property with unique features? A unique view? A desired homesite?
- How long have you been on the market? Have you had one, or several, price reductions to bring the home in line with the market?
- Have you had other offers that have fallen through? Why? Are you getting offers lower than asking, but turning them down? How much lower?
- How many showings have you had? How many showing requests? How is traffic? Is it getting a lot of views online?
- Can you let the home go if you get most, or some, of your needs met?
- How savvy and knowledgeable is the agent representing the buyers?
Once you have these answers, it will help you make a better, more informed decision- and a better counter offer if needed- than if you just rush in and look at price.
Navigate A Multiple Offer, Step #2: Create a spreadsheet for a side-by-side comparison of the offers.
This way you can see how each term of the contracts compare to one another. The agents at SandPeak Realty use this one- it’s great because we can circle the term of each contract that the sellers like the best- it gives a “visual” perspective to a bunch of contract paperwork!
And let’s get this out of the way right away: PRICE is only one part of the equation.
For most sellers, they will say it is the ONLY part that matters to them. But experience will say otherwise.
Ideally the buyer will present an offer that matches your listing terms and needs, but don’t count on it!
Navigate A Multiple Offer, Step #3: Review the Terms of the Offers.
You need to look at the following terms of an offer and decide if they will work for you:
- Offer Price
- Earnest Money Deposit the buyer is willing to give
- Additional Deposits
- Acceptance Date (How long the buyer is giving you to entertain their offer)
- Close of Escrow Date
- Number of Days for the buyer to inspect the home
- How they are paying (Cash, Conventional Financing, FHA or VA Loan, etc.)
- Where the buyers are at in the loan process?
- Does the buyer have a house to sell? Is there a sale contingency?
- Are there other contingencies?
- Your and your agents personal feeling about the buyer and/or the other agent
- Are they asking for closing cost assistance?
- Are they asking for repairs or repair credits?
- Do they want you to pay for a home warranty?
- Are they asking for things that you don’t want included in the sale?
- Are there any other costs the buyer is requesting you to pay?
Navigate A Multiple Offer, Step #4: Decision Time!
As the seller, you have some decisions to make when faced with a multiple offer situation:
- Accept an offer that you like without any counters, and reject the other offers outright.
- Choose one offer you like better, reject the other offers outright, and begin negotiations (or counter-offers as we call them in the business) with that buyer.
- Go back to all parties, advise them that you are in a multiple offer situation, and give them an opportunity to increase their offer or change their terms.
Helpful hint: In the past few years, with so many foreclosure sales on on the market, the banks got into the habit of countering ALL offers they had received on a property by requesting the buyers “highest and best” offer. This may work for a foreclosure, but it won’t work for a normal home seller. Why? Because it asks the buyer to put all their chips on the table at once and doesn’t leave you any negotiation room. SO IF YOUR AGENT ADVISES YOU TO DO THIS- GO GET A NEW AGENT!!!)
You and your agent have to decide what is most important to you- and what you have some leeway on.
Remember: There is NO PERFECT offer- but some are better than others!
When you have decided which contract you would like to accept or counter, there are a few more things to consider:
Don’t Counter with just price- always include price and at least 2 or 3 other terms, such as increasing the deposit, moving the closing date, or asking for additional deposits, such as after the home inspection or appraisal is completed. By just focusing on price, you will get into a bidding war with the buyer and that becomes the focus, instead of the terms.
If you make a counter-offer, there is ALWAYS the chance the buyer may just walk away. So have your agent try and “feel out” where the buyer may stand.
And don’t be afraid to sweeten the pot in yours- or their- favor. For example, if the original offer is a few thousand below your asking price, offer to throw in a home warranty if they agree to come up in price. You could accommodate their need to sell their home if they agree to give you a larger deposit.
There are many ways to “play” with the terms- just try to keep it fair, and don’t be to aggressive.
In real estate we have a saying… “Everything is negotiable”. In order for a real estate transaction to run it’s course smoothly, all parties needs to feel as if they negotiated the most favorable terms- for each party.
Navigate A Multiple Offer, Step #5: Is That All?
“So is it a Done-Deal once everything is agreed and signed?”
Not so fast. Keep in mind that just because you agree on terms initially, there may be another set of negotiations to go through- even if the offer is an AS-IS sale:
- If the property doesn’t appraise at the sales price
- If there are repairs or defects found during the home inspection
- If there are lender required repairs that are called out by the underwriter
- If there issues with an insurance or 4-point inspection
- If there are open permits, unpermitted items, liens or other encumbrances that need to be cured
Though in most cases you won’t deal with these, you need to be aware of them none-the-less.
At this point, more than any other time in the transaction, is when you need an experienced agent who understands your local market AND how to navigate and negotiate through this phase.
If you are thinking it might be a good time to sell, or if you planning on making a move into a new home and wonder what is on the market- give the agents of SandPeak realty a call. We are here to serve and happy to help!
And speaking of help… we hope this article was helpful to you!
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