Even in a buyers’ market, there is always the possibility that you could receive multiple offers when selling your home; your agent will advise the best price for your property’s location to maximize your return on investment. It is your agent’s job to find interested buyers, and the offers should be reasonably close to the listing price. When properties are fairly priced and newly listed, they often attract more than one buyer. So what should you do if you receive multiple offers at the same time for your home? Below are some tips on how multiple offers are handled.
Treat Buyer’s Fairly
First, your agent will let each buyer know that you have received multiple offers for your home. They should respond to each buyer quickly. In a competitive bid situation, it is common for buyers to pull out if you do not communicate with them in a timely manner. Every buyer should be treated fairly and have a set deadline for all parties to have their offer submitted in writing. All parties should be aware of the deadline date and include a copy of their mortgage pre-approval letter with their offer. Your agent will explain to each buyer that you will be evaluating their offers, this will often differentiate who is the most serious buyer.
Identify the Best Buyer
A common mistake is to go after the highest offer, but the most ideal buyer isn’t always the person with the highest bid. The most qualified buyer is often the person that has toured the home several times and has been searching the market for a lengthy time period. This person is likely pre-approved by a mortgage company and can handle the financial responsibility of purchasing the home. If you do not immediately accept the highest offer, there is the possibility that a prospective buyer may be willing to offer more to outbid the competition. Your realtor should contact the buyer’s agents and get a final round of bids. This allows interested buyers to submit their highest and best offer and ensures that you will receive the most for the home. Your agent will also evaluate the contingencies in each offer to determine the risks.
There are many common contingencies that you need to consider when selling your home:
Due Diligence: This is the period of time the buyers has to complete his obligations on the offer. It includes items such as the house inspection, survey and termite inspection. From the sellers point of view, the shorter the due diligence period the better the offer and the more serious the buyer. Residential sales typically have a due diligence period of 7 to 30 days while a commercial sale may require additional time and run for 60 to 90 days.
Mortgage: A mortgage contingency protects the seller from entering into sale with a buyer that can’t afford the home. Waiving a mortgage contingency is risky because the mortgage company could deny the buyer’s loan.
Contingent Sale: A buyer who includes an offer contingent on the sale of the buyer’s property before the subject sale can close. This can be a tricky contingency for a seller to accept as he is held hostage waiting for an unrelated event to take place that he has no control over. A seller should not accept this contingency with no time limit. Under some circumstances and with additional contract clauses; one could find an acceptable compromise to suit both buyer and seller.
Appraisal: A third party is hired by the lender to evaluate the market value of your home. If the appraisal comes in lower than the sale price, the buyer is allowed to walk away from the deal.
1031 Exchange: Similar to the contingent sale, even though the buyer has sold the exchange property the buyer wants to identify the subject property for the replacement property in a 1031 exchange. This contingency may be acceptable, with appropriate time limits and additional clauses. Otherwise, the seller could be stuck if the buyer is unable to complete the requirements to qualify for the 1031 exchange.
If you have a buyer that is willing to do the transaction in cash this eliminates the risk of any loan complications and usually has less contingencies attached. Cash sales typically close in a week to three weeks as opposed to the four to seven weeks on a conventional sale. Before accepting a cash offer, your agent will obtain proof of funds from the buyer to determine the next steps in the transaction. Many sellers are willing to accept a cash offer for less because it saves on closing costs and the risk of buyer not being approved at last minute. However every negotiation is unique to the market, your trusted real estate agent will inform you of the pros and cons of accepting cash offers and if it’s the best option for you.
Evaluate All Offers
Your agent should explain to all potential buyers that you will be reviewing each offer carefully with their guidance and or real estate attorney. Your agent will evaluate each offer and only negotiate with one buyer at a time to reduce the risk of complications arising. The first buyer your agent will begin negotiating with is the one that has the strongest offer and is the most serious buyer.
Once you accept an offer, your agent will likely contact all buyers and inform them of your decision. It is recommended not to disclose terms of your accepted offer because you never know what could happen before closing. Your Realtor can always ask the other buyers if they would like to submit a back-up-offer in case the other party is not able to close on the home.
Work Closely With Your Agent
Your real estate agent can provide a strong estimate on the value of your home and guide you through each step in the process of selling your property. They can prevent complications from arising by making sure that you are dealing with serious buyers that are that qualified and capable of purchasing your home.
Your agent is knowledgeable on the current market and is trained to handle all transactions and documentation for the sale of your home. Your agent is there to ensure all contract and legal issues are handled professionally. Receiving multiple offers on your home can be a complex process, your agent will be there every step of the way from negotiations to closing day.
If you are considering selling your Outer Banks home, vacation rental or investment property; contact Eillu today to discuss your options and find out how we will showcase your home to maximize exposure and get your home sold. Call today to see the difference Eillu makes. Yes you can expect more with Eillu!