Even under the best circumstances, house hunting has never been a pleasant experience. Buyers contact sellers with so much excitement, only for them to be turned down. It is a thrilling yet disappointing experience until you get a seller willing to listen and work with you.
It even gets worse when the inventory is low and multiple buyers all want the same property, and frankly, now isn’t the best time to be house hunting because inventory has been low for the last two years. So, as a result, the market has been characterized by crazy bidding wars.
That is not to say that multiple offers are an exclusive feature of a seller’s market; they can occur in any market. Therefore as a seller, what do you do when you have multiple offers?
Let’s find out.
In a seller’s Market
In a seller’s market, the sellers have the upper hand, and what I have come to realize is that buyers are often beating up, wondering whether the property is worth fighting for.
In such a market, I have seen sellers getting up to 30 offers. I’ve even seen buyers offering $5K over, then $10K over, and as if that’s not enough, they add $15K over, and while tempting to the sellers, they end up losing to higher offers. The market is just frantic.
It sucks for the buyers and their agents, and it sucks being a buyer right now!
How do multiple offer situations work?
When a buyer is interested in a home, they submit an offer. If a house is attractive, many buyers will submit their offers, too, which results in multiple bids.
What happens next is entirely in the seller’s hand, and they can;
- Accept the best offer.
- Wait to receive more offers.
- They can give the bidders a period to submit their best and highest offers.
- They can counter an offer.
- Lastly, they can decline the offer.
This is an exciting situation for the sellers because they are possibly getting the best offers for their homes, but it is a frustrating experience. There is no transparency in the process, and as a buyer, you are left guessing what others have offered and whether your offer is good enough. So, you try to offer more without overstretching your limit.
The seller’s agent has no jurisdiction to select an offer unless they have the authorization. The agent will present all the offers to the seller and make recommendations based on what the seller is looking for and their preference.
Once an offer is chosen, they either counter the bid or accept it and once selected, the seller’s agent will contact all the losing agent’s offers and inform them their offer wasn’t accepted and allow them to try their luck on other homes.
Handling multiple offers
The best way to filter through multiple offers include;
Set a due date for the highest and best offer
Patience! It is the rule of the day.
What I advise sellers is to list their properties and wait for offers. It is even frustrating for the buyers when a seller lists their property, and it is under contract only 12 hours later.
It is important to give buyers enough time to improve their original offers. Then, if you end up in a multiple offer situation, give your buyers enough time to submit their best offers. At least this way, everyone will feel treated fairly.
Ensure scheduling for tours is really easy
If the property is popular and in a hot zone, it is highly possible that in the first 72 hours, you will get a lot of shows scheduled. Therefore, this means that you have to really ensure that home tours are straightforward, and using services like ShowingTime will really improve the buyer’s experience of the home and make it easy for you.
Should you disclose the number of offers?
Well, I leave that entirely up to you.
In most cases and when I represent the buyer, I usually ask for the number of offers to gauge the market.
Does it mean I get the right answer every time? No! Some agents don’t even reply, but some will at least signal the level of competition and the sellers that actually do spark more aggressive offers.
But this should be done cautiously because, as a seller, you don’t want to scare away potential buyers or even get a lower offer if there aren’t many offers.
Selecting the Right Offer
As a buyer, never forget that the offer that gets chosen is entirely up to the seller. As such, what’s important to them?
- The highest bid.
- The bid they are sure of.
- Ease of transition.
Obviously, the seller will look for an offer that offers a combination of the three.
Countering the offer
You may have the best and highest offer, but I v=have seen sellers counter that too, which is crazy, but… it’s their decision. Now, that may be a wrong move to make because the buyer and their agent will be thinking;
“If you are countering our offer, it means that we are the best and highest offer you have. So why would we want to offer more, maybe? The only thing we can do is change a few details like the closing date. We cannot modify the price!”
And they are right.
While it is true that the sellers have the upper hand, it may be tacky countering the best and highest offer.
Let’s talk about Contingencies
In the September issue of the PIN Magazine, I discussed some of the top five contingencies a buyer shouldn’t remove when buying a home. If you haven’t read that article, please check it out here.
Contingencies are essential, and while the best and highest offer doesn’t have any contingencies it wouldn’t be worth it. However, realizing the importance of contingencies, most buyers include contingencies in their offers which basically are provisions that must be met to flow seamlessly.
In the article, I highlighted some of the most important contingencies, which are;
- Home inspection Contingency
- Financing Contingency
- Appraisal Contingency
- Insurance contingency
- Title Contingency
For most contracts, the contingencies are a standard, and there is no exception except maybe for the sale of current home contingency, which is a contingency mostly used in a strong buyer’s market.
All in all, contingencies can be negotiated upon with the caveat that lenders require the borrowers to have the appraisal and financing contingencies, or they won’t approve the loan.
As such, as a seller, it is up to you to decide what you are comfortable with, and it is also important to sit down with the agent to help you make the most appropriate decision.
If you want to sell your home in Florida, reach out to me, and let’s get this ball rolling. For buyers, financial literacy is key to helping you navigate this complex seller’s market. I would advise you to have a sit down with your agent or mortgage advisor, who will advise you on the best approach to take. Alternatively, reach out to Eric Lawrence Frazier MBA, a mortgage professional with over 30 years of experience. You can reach Eric Lawrence Frazier MBA today at 800-261-1634 ext. 703.
About the Power Is Now Media
The Power Is Now Media is an online multimedia company founded in 2009 by Eric L. Frazier, MBA, headquartered in Riverside, California. We advocate for homeownership, wealth building, and financial literacy for low to moderate-income and minority communities. The Power Is Now Media corporate office is located at 3739 6th Street Riverside, CA 92501. Ph: 800-401-8994 Website: www.thepowerisnow.com
Sources;
https://www.thebalance.com/multiple-offers-competing-home-offers-1798836
https://hooquest.com/multiple-offers/
https://www.homesandgardens.com/news/multiple-offers-on-a-house
