Friday, April 30, 2021 / by Chris Carozza
How to Handle Multiple Offers When Selling a Home
Fielding an influx of buyer's offers is, at first blush, every homeowner's dream scenario. While going with the highest bid may seem like the obvious choice, things are not quite that simple. The process of sifting through the offers and weighing all the different factors can be challenging because the 'best' offer may not be as straightforward. Moreover, top-selling agents, whose years of experience have earned them the shrewd negotiator badge, warn against various issues that might surface while trying to handle multiple offers when selling a home. Luckily, we lay out some strategies before you to help to maximize your return and, at the same time, avoid high-risk buyers whose offers to purchase your property might evaporate.
Make sure that the house lives up to the price tag
Well-executed staging plays a crucial part in achieving top dollar. The buyer will appreciate that you put in the time and resources to present your property in the best light and make it move-in ready. The latter might make or break the deal because buyers usually buy at the top of their price point. Moreover, after the down payment and the closing cost, they are often left with insufficient funds to pay for any improvements. Others may not have the time to take on such a project right away, especially if your area is new to them and they don't know any contractors.
Secondly, slacking on staging your home may cause even those desperate buyers to walk away because the house doesn't live up to the price tag. And while this doesn't mean you should sink money into major renovations, sellers will want to juice their profits. Therefore, consider adding a fresh coat of paint, updating lighting fixtures, replacing outdated kitchen appliances and flooring, etc.
In any case, when it comes to pricing their home, sellers should keep a cool head. Instead of listing your property at the moonshot price you may be hoping for, work out a strong opening price with your agent, and let the market factors and real-time strategy do the rest.
Keep your options open
It can be incredibly tempting to choose that nice, big, high-priced offer on your property. Especially if the buyer is willing to go considerably above your asking price. And it is only natural for sellers to hope to make as much profit as possible from their sale. However, real estate experts advise practicing caution and patience because the highest offer may not necessarily be the best. The wisest thing to do is to keep your options open. Allowing your home to remain on the market for at least a fortnight will give a more significant chunk of interested buyers the chance to see the property. The greater the choice of buyers, the better your odds are of not winding up with a risky one.
Leverage multiple offers
Once you have the purchase offers and terms laid out before you, as the seller, you can make a counter-offer on any of the bids and turn a good offer into a great one. Start by talking through the bids with your agent, and agree on a couple of the best ones. Then, ask for further accommodation on each (for instance, adjusting the closing date). As long as a seller gives permission, a listing agent can freely spill the details of the top bid to the other competing buyer's agents, thus encouraging at least one motivated buyer to match the offer. You can also ask all bidders to make their "best and final offer" in a certain amount of time.
This is a great way to motivate the buyers and drive urgency at the same time. However, should anything fall flat, it's a wise tactic to have a backup buyer. For instance, bear in mind that there may be buyers who might have made offers on multiple real estate properties. If yours is a super-competitive landscape, they might be hoping to up their odds of landing a deal. This can turn into a dicey situation pretty quickly if another seller also selects the buyer you choose.
Consider the buyers' financing
In terms of buyer funding, the all-cash offers are still at the top of the hierarchy of home offers. If the buyer intends to pay in cash, this will significantly simplify the buying process. For starters, you won't have to depend on lender financing for the selling process to go smoothly. Secondly, cash buyers can remove appraisal and financing contingencies. And finally, the closing is usually much smoother and faster. However, if the buyer is also seeking a mortgage, consider whether they are pre-approved. An offer from a pre-approved buyer is always going to be preferable to its alternative.
Beyond the buyer funding and the amount they offer, experts agree that sellers should pay close attention to the terms of the sales contract. When buyers bid in terms, which are commonly referred to as contingencies, this allows them to change their mind and walk away from the deal if specific criteria are not met. In such an event, the chances are that the seller could end up empty-handed.
Look keenly at contingencies
Being smack in the middle of multiple offers when selling a property will require you to review buyer contingencies carefully. The most common contingency clauses in today's home purchase contracts include getting approved for a mortgage, ensuring the property is valued at a minimum, specified amount, and having the house pass an inspection. Some buyers might even include a home sale contingency, which stipulates the timeframe the buyer has to sell their current house before they purchase your property. This can be difficult for the sellers. They might have to pass up another offer because they are still waiting for the outcome of this clause. However, adding a kick-out clause will enable you to continue to market your property. In this case, if another qualified buyer steps in, the current buyer has a specified amount of time to remove the home sale contingency and thus keep the contract alive.
All things considered, while figuring out how to handle multiple offers when selling your home, keep in mind that with contracts with fewer contingencies, the chances are lower that the buyer will back out of the deal.
Review desirable ‘extras’
Something else to consider when juggling multiple offers for your property: closing costs. To stand out against other offers, some buyers are willing to offer to pay some of the closing costs, which the seller typically pays. Moreover, with multiple bidders, another buyer might make an offer with an escalation clause to outbid the rest. With several offers and contingency terms on your hands, these kinds of sweeteners can very easily tip the balance.
Time is of the essence
Unless you are in a hurry, it might pay off to wait for the highest offer. However, for most sellers, closing within weeks is preferable to dragging the deal out for months. This can be one of the deciding factors if you are reviewing similar offers and need to move soon. Say, for instance, that you've got a new job offer, so you are preparing to leave New York and settle in a neighboring state with the help of interstate movers. The buyer who is willing to give you the best offer in the shortest time will allow you to execute your relocation and start your job according to schedule.
Having to handle multiple offers when selling a home may be called an enviable problem. However, it still brings a set of its own disadvantages. Try to avoid the temptation of handing the keys of your property over to the highest bidder. Instead, carefully consider the contract terms, and practice patience.
Meta description: In this article, we take a look at how to successfully handle multiple offers when selling a home. Our tips will surely help you close the best deal possible.