As you probably are already aware, the current real estate market is extremely competitive with many buyers dealing with a tight inventory of homes for sale. Therefore, we have seen a rise in multiple offers being presented on properties for sale. In many cases, this is even resulting in bidding wars. While this is welcomed news for sellers, it is critical that these offers are handled appropriately & effectively in order for the end result to be a successful closing.
Seller’s options
If you are being represented by a professional real estate agent, then he/she should be able to explain the various options available to you. Below are a few common options:
- Accept the “best” offer: In doing this, you might simply select the highest offer or potentially a cash offer with no financing contingencies. In doing this, you would alert the other prospective buyers that you have accepted a better offer.
- Counter one offer while putting the other offers to the side while awaiting your counter-offer. If the first offer does not result in an executed contract, then you would move on to the next offer.
- Inform all parties that there are multiple offers for the property, and they will need to submit their “highest & best” offer by a certain date/time.
Your real estate agent should be able to provide guidance based on past experience in your local market. In addition, savvy real estate agents should be able to ascertain the level of interest & qualifications of a prospective buyer through communications with the cooperating real estate agent representing the buyer.
Analyze the offers
On the surface, many people think that the highest price is automatically the strongest offer. Although price is certainly a factor, there are various other items that must be analyzed when considering and/or comparing offers. For example, there may be times when you realize that the highest offer is financing a larger amount of the purchase and therefore has a financing contingency. Other times, a buyer may present an offer that is contingent on them selling another property first. Lastly, you may also have another offer that may be slightly below in price, but it is a cash offer with no financing contingencies. All of these factors must be heavily scrutinized in order to determine which offer provides the highest likelihood of a successful closing.
As a seller, you must also keep in mind that even if you are able to receive an executed contract, you still have several potential obstacles to navigate through prior to the closing table. For starters, the buyer will typically have a period of time to conduct an inspection of the property. This period of time is usually 7 – 10 days. With this said, there may be some items uncovered that need repair or a seller’s credit for the repair. In addition, if the buyer is obtaining a mortgage, there will also be a property appraisal. The results of this appraisal may also derail any deal that you may have thought you had.
Summary
In closing, a multiple offer situation should be welcomed news to any seller. However, it is important that you handle these offers in the appropriate and respectful way to ensure that the end result will be a successful closing. As always, it is highly recommended that your real estate agent behave in an honest and ethical way. As a matter of fact, The Code of Ethics obligates REALTORS® to be honest with all parties; to present offers and counter-offers quickly and objectively; and to cooperate with other brokers. Cooperation involves sharing of relevant information. Just like much analysis should go into how to effectively price and market a property, there should also be a thorough approach on how to handle offers. A local real estate professional that is knowledgeable in your market, honest & respectful, and an effective communicator will be critical to successfully selling your home!
