Drafted By: Melissa Kubek
So, your home has come up for sale in the local market and is such hot item – that you have not just one, but several potential buyers interested in purchasing your home! This two part article is here to help with the basics of what a multiple offer situation is and how best to navigate your way through to a successfully accepted offer. I will address the multiple offer first from the Seller’s perspective in this article and I will address the Buyer’s perspective in a separate article.
The local real estate market is currently very much a Seller’s Market and every day we’re hearing about properties being sold above their asking price in multiple offers. Unless you’re a realtor or frequently in the market buying and selling homes, chances are that you’ve not yet encountered the experience of a multiple bid. In this two part article, I will briefly outline what a multiple offer is and how to negotiate as either a seller and/or a buyer.
What is a multiple Offer?
When two or more Buyers expresses written interest at the same time by way of Contract of Purchase and Sale, to purchase the same property. The Seller must choose one contract to work with as the primary offer and can offer a back up position to the Buyers of the non-primary offer. The Buyers of the non-primary offer can agree to or request to be placed into back up at this time or opt out and rescind their offer completely.
The Goal of a multiple offer:
1. As Seller – To get the best possible contract accepted.
2. As Buyer – To get YOUR offer accepted!
Typically in a multiple offer situation, as a buyer you have one shot at getting your offer accepted. This means you likely won’t have an opportunity to negotiate and therefore it’s in your best interest to give your absolute best offer in terms of price, dates, included items and conditions/terms. This often means coming in above the current asking price of the home that you’re wanting to purchase, among other details that make your offer more enticing.
WWW.METROLIVINGZINE.COM NEWS IMAGE CREDIT http://bit.ly/1JJz39w What to do as a SELLER or a BUYER in a MULTIPLE offer situation!
What to do in a Multiple Offer as the Seller:
1. Don’t make a decision until you’ve reviewed each offer. Each offer will have its pros and cons. The more pros, the better the offer. However, take some time to review each offer and ask questions if you need clarification with any part of any offer prior to signing or accepting an offer.
2. How to know which is the best offer. The best offer will be whichever contract offers the best terms for you. Price is not always the primary factor in determining which offer is best, though it is important. Typically the closer an offer is to being unconditional, the more attractive it becomes. An unconditional offer is one that has no conditions to be fulfilled prior to a Buyer committing to purchasing a home.
For Example: An offer may have several conditions to be fulfilled by the buyer such as ensuring the buyer’s financing is in place, that the buyer completes a building inspection on the property, that the buyer has had the opportunity to read through any documents regarding the property, etc. Each of these conditions are put into the contract to lessen the risk to the Buyer and so that the buyer fully understands what it is that they are purchasing. Some buyers will offer a contract without these additional conditions as a way of making the offer more ‘solid’ and simple. Conditions add complexity and when it comes to a multiple offer, simplicity is usually better and often wins.
3. The highest priced offer isn’t always the best. While a higher price can make an offer more attractive, if a higher priced offer also has long drawn out dates, too many conditions or other complications, it can sometimes mean that a simple, lesser priced offer with sooner dates or dates that are negotiable, could be the more desirable option.
4. Choosing a Winner: Upon reviewing each of the offers and asking for any necessary clarification, it’s time to make a decision. Which offer will you choose to work with. Usually one offer stands out among the rest as the clear winner. If there is no clear winner, you can go back to each of the Buyers and ask that they submit new offers as they are very similar to one another. However, if a clear winner is present, your Realtor® will coach you with where to initial & sign on the ‘winning’ contract (there may be additional negotiating that takes place with the ‘winning contract’ before it is fully agreeable). This contract is now called an accepted offer. If this contract still has conditions to be fulfilled by the buyer such as arranging for financing, a building inspection etc, then your home is not yet considered sold. Only when there are no conditions remaining to complete on a fully accepted offer, is a home considered sold.
5. What about the other offers that were presented but didn’t get accepted? As a seller you can choose to offer a back up position to another acceptable offer. The Buyer of said offer may agree to the back up position with their offer as is, the buyer may choose to rescind their offer completely or negotiate their offer with the seller prior to agreeing to a back up position. A back up offer only comes into play when a first/primary offer collapses for any reason. If a first/primary offer does not collapse and all conditions are removed from the contract, then the buyer of the first offer is now legally on the hook to purchase the home and the Buyer with the back up offer is no longer able to purchase the home and is removed from back up position.
As a Seller in a multiple offer situation, your Realtor® will be your best tool in helping you to decide which offer is best, based on your particular wants, needs and goals. I always come back to how important it is to choose the right agent for the job of selling your home and/or for buying your next one.
Perhaps you’ve experienced a multiple offer situation as a seller. If you have, what are some tips you’d offer other sellers going through the process? Comment below or send me a message directly – Contact Melissa Kubek @ 604-754-8122 or by email: firstname.lastname@example.org
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