Understanding how Multiple Offers on a Home Should be Handled
The dream of many a home seller is to receive multiple offers. The unfortunate part of a multiple offer situation is that there will likely be winners and losers. The outcome of these situations is important to all parties, and it is critical they understand the ethics and strategy of how to handle multiple offers.
Your home hits the market, and several showings happen almost immediately. This type of activity a good sign the home is desirable and priced reasonably. Your agent tells you several buyers who have seen the home will be submitting offers! Great! At least two offers! Now there will be a bidding war!!! Not so fast.
The Notification Process
First, your agent will need to let the agents representing the interested buyers know that they may be competing to purchase the home. After notification, we wait for the offers to be submitted. There are times when one of the buyers finds out there is another interested party and decides not to submit an offer or simply change their mind. If the offers are submitted, your agent will once again notify the respective buyer agents to let them know the offers were received. It is now when your agent may suggest the buyer agents counsel their client to bring their highest and best offer.
So why did your agent tell the buyer agents to have their clients bring the best offer they could? Can’t you just negotiate the best offer with one of them and then ask the other buyer to offer more? Can’t we go back and forth like an auction until one of them gives up? Short answer, not really!
Long answer: By informing all interested parties that there is certified interest in a property and asking them to bring their best offer means just that. Auction over! Asking interested buyers to bring their best before presenting the offers is the actual “Bidding War” if you like.
The Offers Presented. Now What?
The seller could choose not to accept any of the offers, accept the offer of their choosing, or select the offer most appealing, push all other offers to the side, and negotiate the selected offer. If negotiations on the selected offer did not result in a signed agreement, the seller could then chose to negotiate a second offer.
Buyers should consider the home they want and make an offer consistent with their desire, whether their offer is the only one or there are ten offers on the home they desire. The buyer and their agent can always consider what is known as an escalation clause, which may give them an advantage in negotiation.
The process of fielding multiple offers can be tedious. Communication with all parties is key when dealing with multiple offers on a home. It is important that every prospective buyer has a fair opportunity to purchase the desired property offered for sale by a Realtor®.
Dealing fairly and honestly is one of the core standards of the Realtor® creed, but this is not just about the Realtor®. Home sale transactions can be tedious and often filled with terms, conditions, and due diligence. The “Good Will” in a real estate sale needs to last throughout the sometimes lengthy course of the deal. The “Good Will” I speak of happens best when parties deal and negotiate fairly, openly and honestly from day one.
Knowledge is Power!