With the rebounding housing market, many of us are handling multiple offer situations with buyers and sellers. This can add much more stress, especially for buyers who have their heart set on a home and on a budget. When working with your buyer clients, our core responsibilities include educating them on the multiple offer process and helping to relieve their anxiety. As agents, our facilitation of multiple offers can really show our worth.
Five Tips for Handling Multiple Offer Situations
1. Highest and Best – Once you verify there is, in fact, another offer you are competing against, all offers are usually told to present their final “highest and best” offer. Inform your buyer client that they must put together not only their highest offer purchase price but also their best terms. The client may have had their heart set on getting the home for a particular reduced price but that may no longer be an option. Offers at or above the list price are common but not an absolute with multiple offer situations. Contingencies and terms can also make or break your offer’s success. Closing dates, “as is” and inspection terms, mortgage terms, expenses and costs, the buyers’ situation and many other issues can have great impact on the success of an offer. It is important to educate your clients on the process and their options by discussing all possible scenarios. Clients can become understandably emotional, so listen, validate and educate to a calm conclusion.
2. Make A Deadline – The waiting period is a very stressful part for all parties involved. Make sure there is a deadline to submit your final offer as well as a deadline to receive an answer. Clients can work much better when they know how much time they have to reach decisions, and then to hear back on whether they “got the house” or have to move on to the next opportunity.
3. Appraisal Protection – Although a home appraisal is never a guarantee (or always accurate), in most cases buyers must get a mortgage to buy a home and the lender will conduct a home valuation appraisal. If the home does not appraise for at least the purchase price, the seller has a few choices: appeal the appraisal; kill the deal, as most buyers won’t come up with the difference in cash; or reduce the purchase price to the appraised value to continue with the sale. If the appraisal is fair, sellers should at least consider reducing the purchase price to successfully proceed on their sale, because they may run into the same issue if another buyer comes along anyway. This scenario can protect a buyer from making an offer that was too high.
4. Building Equity – In our market, which is currently still down, there is equity to be gained in the coming years. Even if a buyer is not able to negotiate a lower price and ends up offering at or above list price due to multiple offers, equity will still build.
5. No Regrets – The main idea I have discussed with my clients (as well as with my own family during our multiple offer purchase recently) is to make sure that no matter what your final offer is, that you would have no regrets looking back, whether you get the home or not. A home is not just about a dollar amount, but what it adds to your life. If you don’t get the house, will your offer have been enough, or would you have regrets? If you do get the house, will your offer be satisfactory to you? Clients must picture their life in the particular home and then get down to the details of their highest and best within a livable budget.
Christine Groves is a licensed broker/Realtor with Coldwell Banker Residential Brokerage in Wheaton. She can be contacted at:
Phone: (630) 346-3272