How to Handle Multiple Offers as a Seller
Updated: Oct 23, 2022
The current housing market is seeing a large influx of buyers & not enough properties for sale. In fact, as of this writing, the average days on market in the Twin Cities Metro area (the average number of days it takes for a house to go from listed to under contract) is 12 days. For a bit of perspective, the average days on market in 2007 – before the housing crisis of 2008 – was 82 days. This is a direct result of the very low housing inventory over the last 5 years. What we are often seeing is multiple offers on a property. But not all offers are created equal. Agents & their sellers can review those offers & pick the best one. But what makes an offer great? Here we break down How to Handle Multiple Offers as a Seller & offer some extra little tips to get the best value for your home.
What is Most Important to You as the Seller?
Everyone has slightly different needs and priorities when it comes to selling a home. A seller should ask themselves what is most important to them and their family in the sale process. Is price most important? Some sellers have a certain number in mind and that number is more important than anything else. What about other terms, like buyer’s inspection? Or closing date? Or a cash vs financed offer?
Not All Offers Are Equal
In today’s market, a buyer’s agent should urge their clients to bring their highest & best offer as it’s easy to reject those that leave room for negotiation. Often, the higher the offer the more it is considered, however, the terms of the offer are also important. Cash offers are more desirable to sellers typically because they don’t have to worry about financing falling through. But even two cash offers may have very different terms that affect the seller and the transaction. Another desirable term would be an escalation clause where the buyers automatically increase their purchase price if another is offered. These clauses can cap at a certain amount, or they can continue raising their offer until it is the best. Higher down payments & flexible buyers are also things to consider when reviewing multiple offers. Another condition of an offer that sellers should consider is whether the buyer is willing to wave contingencies. In today’s market, having a home sale contingency can be a major setback to an offer. Appraisal contingencies are something to consider waving (be careful) but it is not recommended to wave inspection & title contingencies. Buyers can sweeten their offer by scheduling the title & inspection reviews as early as possible. This allows the seller to have peace of mind that they can relist the home quickly in case the deal falls through. In a seller’s market, it is common to see multiple offers on a home & all the terms are considered important.
What Happens Next?
If you receive multiple offers, consider setting a deadline for all final offers. This will create urgency amongst buyers & help weed out less than serious buyers. Disclosing reasonable offers to competing buyers will encourage them to make a more favorable offer or narrow down your choices. Be careful with disclosing the terms as it could lead to a bidding war & ultimately buyer’s remorse.
Sometimes, selecting one of the multiple offers and asking that party to come up slightly is the best course. Over the years I’ve had many experiences where multiple offers came in and I advised my seller client to consider choosing one of the offers to negotiate with. You can put it to the buyer’s agent something like this: “We have received several offers, you’re client’s offer has some good elements to it and is among the best…we would be willing to skip announcing the highest and best offer deadline and move forward with your client without further negotiation or delay if they will move their offer up to [new price] or adjusted terms, etc].” This gets the ball rolling and avoids the complexity of navigating the multiple offers and/or bidding war.
The next step in fielding multiple offers would be reviewing the full terms of the offers & deciding which works best for you. If you as the seller still can’t decide which offer is best, consider a counteroffer on a certain term with each potential buyer.
Although today’s market is very favorable for a seller, it is not guaranteed that you will receive multiple offers on your home. Working with a trusted realtor can increase the likelihood of multiple offers by pricing the property appropriately for the local market and they can help you navigate those offers for the best value. Have an experience with how you handled multiple offers that you’d like to share?
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Multiple Real Estate Sources:
AceAbleAgent.com: Best Practices Listing Multiple Offers
Edina Realty: Multiple Offer Tips for Sellers
Realtor.com: How Are Multiple Offers Handled?
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