Lets set the scene.. The home has been just been listed at a price based on comps so it is just
right, its either staged or the interior is designed to appeal to the masses, and you have just
concluded your second open house. All weekend long you are being told, “OH this space will
sell quickly!” Sunday evening comes around and wham, the first offer comes in, then the
second. By the end of the evening you are on the phone with different buyer agents negotiating
and you have seven written offers for the seller. The seller of course is beyond thrilled! But
don't put your cart before the horse just yet. The deal isn’t done. The last thing you want to do
is lose your focus and choose a buyer that may cause the whole deal to fall apart down the line.
So how do you pick the best offer in a multiple offer situation? Be sure not to let the situation go
to your head.
You have heard it, “we want top dollar” and “cash is king”. Of course those are lovely. But when
you are dealing with multiple buyers who are eager, highest dollar isn’t always the winner. You
will want to start with price, but don’t end there. It will get you attention for sure, but you want to
stick to the details. You’ll want to keep in mind the ideal process of your seller. What’s their
ideal close date? Are their any contingencies? How is the home going to be funded. Any offer
for sure should never be considered unless a pre-approval is included. You’ll still need to
secure timing with the lender and iron out some details, but a pre-approval is a start to what the
buyer can actually afford. The last thing you want to do is take the highest bid only to find out
the buyer can’t back it up.
You also will want to look at the buyer concessions. When offers are coming in, its easy to get
caught up in “me, me, me” and you overlook any buyer requests that may be part of the offer.
Study every offer to be sure you understand the give and take. Does the offer come with high
closing costs? Is it based on a mortgage contingency? Do they need to sell another home
first? You want to review the big picture and see which offers will generate the highest amount
of profit for your client. You’ll need to take the prices of the offers and subtract the cost of taxes,
fees, and closing costs. You also want to see who their mortgage lender is. Are they working
with a reputable company? Or does the company come with a bad reputation, for example,
they take longer to close the deal.
A buyer who also will submit a large earnest money deposit shows they are serious. Pending
home sales can sometimes blow up, and many sellers worry that if they commit to an offer, the
winning offer could back out. Leaving them high and dry because the other buyers have since
disappeared. The amount you put down to secure the deal, shows how serious you are about
closing if you increase it above the normal amount.
At the end of the day, everyone wants a good deal. In a multiple offer situation, you still want to
hold true to what the numbers are saying. For any listing, if you list it well, it very well may turn
into a multiple offer situation that turns into a bidding war. Which results in the seller getting
higher than the asking price as well. Its always better to price it according to the market, get
multiple offers and go up.. then over price it, get less offers and have to reduce the price. From
a buyer stand point, come with your best possible offer that meets all of the other parameters,
and see what happens! From a seller stand point, don’t let a high offer dim your focus. Keep
your eye on the larger picture to chose the best deal that feels the safest and that will close. We
want both the buyer and the seller to be the winner, so doing so will avoid wasting any time.