Hurray, multiple offers…. Not so fast! Multiple offers are usually a good thing if you are a home seller, but knowing how to handle them is important.
Yes, two offers are better than one, three better than two, etc. The sense of high demand for your home is great, and for the listing agent there is a satisfaction of a job well done.But multiple offers require negotiation skills and finesse; without it, you’ll have a big mess and many angry people.
So how to best handle a multiple offer situation when selling you home? Here are a few tips to get the most out of the situation and come out smelling like a rose.
- Tread Lightly. Reason dictates you have the upper hand when there are several offers when selling your house or condo. But your upper hand lasts as long as the negotiations, and as long as you have several people interested in a “bidding war.” Once an offer is signed, you are working with one party. Alienating a buyer with lack of appreciation or pushing price too much can result in a difficult buyer or worse, a buyer abandoning negotiations.
- Learn Value. Multiple offers are an opportunity to learn value. Many offers exceeding the asking price means your home is worth more than asking. Several offers below asking price? Asking price is too high. Offers all over the place? You have a difficult home to price, which could result in appraisal problems. Whatever you have on the table, the buyers are reflecting value back to you, so listen.
- Price Is Not Always King. In 2005, financing was barely an issue. If you had a pulse, you got a mortgage. In 2012 things are different. A buyer with strong pre-approval, high down payment or cash can be preferable to a buyer with a low down payment, even for less money. Other considerations include the closing date, mortgage commitment deadline and any other provisions.
- Honesty and Transparency. It is not necessary to discuss terms and conditions about other offers with buyers and agents. But it is necessary to disclosure the same information to everyone, let everyone know how many offers are on the table, and give everyone the same deadlines.
- Don’t Gamble. Just because four buyers are interested in your home today, doesn’t mean anyone will want it tomorrow. These could be your four best buyers, even if they are not giving you the exact terms and conditions you want, or expect you’ll get. Unlike cheese, real estate listings don’t get better with age.
It’s hard to believe we are discussing multiple offers when just a year ago we were starting to pull ourselves out of the real estate slump. The real estate revival is fueled by a lack of inventory, defining a seller’s market. But even when the market is favoring your side, be mindful of multiple offers and use some grace in handling them.