In most markets around the country, real estate has been red hot with the expectation that it will continue to heat up even more this summer.
As someone who’s selling a house, you could end up with multiple offers on your home. In fact, desirable listings in competitive neighborhoods often receive 10 or more offers in a matter of hours. And while this is a good problem to have, it’s a problem, nonetheless. How do you choose the right one?
Sellers often look for ways to spark a bidding war on their house. However, when they get their wish, they aren’t always clear on how to proceed. If you find yourself with multiple offers on your house, proceed in a calculated manner that allows you to maximize the sale price and limit risk. Let’s take a look:
One of the biggest mistakes sellers make when fielding multiple offers is only considering the highest ones. In other words, if they have two offers at $330,000, one at $327,000, and a couple more at $325,000, they only look at the first two offers. While this may sound good in theory, there are so many other factors that must be taken into account.
Always take an offer seriously until you’ve been able to systematically rule it out by reviewing all of the pertinent factors. As you’ll see throughout this article, the financial component of an offer is just that – a component.
One good way to compare multiple offers is by looking at the contingencies attached to each offer. While you’ll occasionally run across a no-contingency offer, most will have one or more of them attached. These may include conditions related to the home inspection, mortgage financing, sale of current home, and/or home appraisal.
If you have multiple offers, you obviously have leverage. Use this to your advantage and be wary of accepting an offer with too many contingencies – especially one that hinges on the buyer selling their current residence.
“A home sale contingency can be risky to sellers because there is no guarantee that the home will sell,” Jean Folger writes for Investopedia. “Even if the contract allows the seller to continue to market the property and accept offers, the house may be listed “under contract,” making it less attractive to other potential buyers. Many people looking for homes will steer clear of a property under contract because they don’t want to waste time and risk falling in love with a property they may never have the chance to buy.”
If all your offers have contingencies, you may want to have your agent communicate the fact that you’re looking for an easy deal. While some prospective buyers won’t budge, others may be willing to drop their contingencies in order to get the house.
It’s important that you take financing methods into account. Is the buyer pre-approved? Are they offering more than the amount they’re approved for? Is anyone offering cash?
If you’re lucky enough to receive a cash offer, it may be worth accepting – even if it’s for slightly less than the other offers. With a cash deal, you don’t have to wait for the mortgage company to approve the deal. It’s a smooth, easy transaction with considerably fewer speed bumps.
You can also tell a lot about how serious a buyer is by how much they’re willing to put down. Someone who is willing to pay for 50 percent of the house in cash is probably a more serious buyer than someone looking to go zero percent down.
One of the worst parts about selling a house is dealing with repair requests after a home inspection. Some buyers expect you to fix every single thing the inspector puts on the list. Even if it isn’t expensive, it can be rather annoying and time consuming.
Since you have the leverage, you may consider countering your offers and selling the house as-is. In other words, you won’t fix anything. If you have a multiple offers, at least one person is willing to accept this risk.
When all offers look the same, you might want to have your agent communicate with all of the buyers and let them know that you’ll be looking for the highest and best offer. Set a deadline – usually within 12-24 hours – and wait for the offers to roll in.
In today’s market, its actually quite common to receive an offer with an escalation cause. This is simply an offer that says, “I’ll pay X price for this home, but if you receive an offer that’s higher than mine, I’m willing to increase my price to $2,500 more than the highest offer (up to Y amount).”
The biggest piece of advice is to communicate openly and regularly with your agent. You’re paying them for a reason, so never feel like you’re overstepping. You need to make sure there are no assumptions or confusion. The last thing you want to do is accept multiple offers. It’s happened before and can be a legal and financial nightmare.
When it comes to selling your house, you want to work with an agent who understands the market, knows how to handle a variety of situations, and looks out for your best interests above everything else.
At Green Residential, our team of experienced real estate agents have seen it all. And because we operate on a flat fee basis, you never have to worry about whether or not your best interests are being represented. We work for you and will do whatever it takes to help you maximize the sale price and limit risk. For additional information, please contact us today!
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