Buyers: Multiple Offer Situations
Educated buyers can gain an edge!
As the Real Estate market continues to improve, we tend to see situations that we haven’t seen in quite a while. One of the most confusing is the multiple offer situation. While it’s true that sellers with more than one offer will pick the “best” one, the term “best” is quite misleading. Sellers take all aspects into account when reviewing offers. And sometimes, the “best” offer isn’t the one with the highest price.
Buyers hoping to win a bid should consider all the variables and plan accordingly. Here are some things to consider when making an offer:
- Earnest money. In general, the more money a buyer is willing to put on the line, the more appealing the offer will be to the seller. This generally signals the seller that the buyer is serious and willing to risk their own money for the deal.
- Verification. Can the buyer really afford the home? It helps if a buyer submits proof, and underwriting approval carries more weight than a simple letter from the lender.
- Courtesy. If a house isn’t empty during a showing, the seller may need extra time to move. A buyer willing to give the seller some wiggle room could gain an edge.
- Strength. Buyers should submit their highest offer first. If that offer fails, they’ll know they tried their best. Everyone wants to feel like they’re getting a bargain, but submitting a low offer can mean missing out on the deal entirely.
- Market value. Some sellers price their home low in order to attract multiple bids. If a buyer balks at offering a price that’s higher than the asking price, compare the offer to nearby home values. Even an over-the-asking-price offer could be a bargain for that neighborhood.
- No contingencies. Sometimes they’re necessary, but the fewer the better.
- Keep it simple. Little requests could irritate a seller, such asking for a home warranty or termite bond.
- Closing costs. Sellers with multiple offers often look at the bottom line – how much would I actually receive from each of these offers? In some cases, a request to pay extra closing costs could hurt.
- Actual concerns. What does the seller really want? To get out quickly? To get the most money? To know that the family home is going to someone who appreciates its emotional worth? Find out if you can.
- Prepare for the next step. Even the best offer could receive a counter offer. For many agents and sellers, it’s just good business. If a buyer submits the “best offer,” a counter-offer may come as a surprise if their agent hasn’t prepared them for it.
- Details count. If a seller responds to an offer, the timing is important. Responses should be quick, and any seller requests, even idiosyncratic, should be respected.
Source: RISMedia (05/31/15) Workman, Verl
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