Last month we talked about how to navigate a multiple offer situation as a buyer. On the flip side, if you’re in the enviable position of dealing with multiple offers as a seller, handling the situation thoughtfully can make all the difference. Here are few tips on how best to handle the process.
Make a game plan
Go through each offer with your broker and discuss your negotiation strategy. Will you inform all buyers that there are multiple offers and invite them to present their ‘best and final’ terms within a set time frame? Or, will you counter one offer before making a decision on the others?
There are a number of different strategies so be sure to consult with your broker to make sure you are getting all of the details from each buyer and making the best decision for your own situation.
Think more than price
Sure, it’s tempting to accept the highest bid, but the highest priced offer isn’t always the best offer. Remember that once an offer is accepted, there are many more steps to complete in order to successfully close the transaction.
Every seller has unique goals, so factors like finance contingencies and closing date may be as important as the offer price. In addition, you should take the appraisal of your home into consideration if you choose the highest priced offer. Some buyers will bid above list price and possibly above market value just to “win”, but if the appraisal comes in at a price lower than the offer, the buyer may have no choice but to cancel the contract or ask you to reduce the purchase price.
Respond to offers in a timely manner, and once the terms are to your liking, be sure to sign the contract as soon as possible. The longer a negotiation drags on, the more tenuous it becomes as buyers may become suspicious or concerned and rescind their offers.
Maintain your goals
Multiple offers can be stressful for all parties in the transaction so it’s important to be clear headed and stick to your objectives. For example, if you want a quick closing, keep that in mind when evaluating every bid that you’ve received. There are often elevated levels of emotion during the negotiation of multiple offers so try not to get caught up in those emotions.
While you likely have the leverage in negotiations, you always want to keep a buyer engaged and avoid ultimatums. Buyers are generally more likely to walk away from a negotiation when they feel as though they’ve lost control or they suspect unethical behavior (whether it is happening or not – perception is reality).
While the goal is to get you the best possible price and terms for your home, not losing your buyer(s) and successfully closing should be just as important.