With the current real estate market conditions being so competitive, it’s no surprise that many deals involve multiple offers from multiple potential buyers. As a real estate agent, handling and responding to these competing offers can be tricky. That’s why understanding how to best navigate multi-offer situations is essential for your success in this business. In this blog post, we’ll discuss several tips for dealing with multiple offers in real estate. With these strategies on hand, you’ll be well prepared for any offer situation that comes your way!
Handling Multiple Offers as a Buyer’s Agent
If you are a real estate agent in a market known for multiple offers, you must prepare your buyers for this possibility.
Here are some tips to give buyers so they are ready to compete in a competitive market.
- Get pre-approved for your home loan.
- Know that offering the asking price may not be enough.
- Be ready to move quickly and make fast decisions.
- Decide what contingencies you must have – and those you are willing to do without.
- Remember that price isn’t the only consideration. A seller will also look at closing dates, contingency clauses, and financing.
- You may have to make several offers before one is accepted.
- Avoid making low-ball offers in hot markets. A seller with many offers isn’t going to take the time to negotiate with you if you don’t make a fair beginning offer.
- Consider offering an escalation clause for dream properties, which states that you will offer X amount over the highest offer (up to a predetermined amount).
You have educated your clients about competing in a hot market, and they are ready to make their first offer for a property that will likely have multiple offers. Advise your buyer that the seller has several options when receiving numerous offers.
- The seller can accept the “best” offer.
- The seller can inform all potential buyers that other offers are on the table.
- A seller may disclose details about other offers to potential buyers. (While the Code of Ethics does not prohibit such disclosure, some state laws may limit the ability of real estate brokers to disclose the terms of other offers to third parties.)
- The seller can counter one offer and wait to hear back from this buyer before communicating with the other buyers.
- The seller can counter one offer and reject the others.
- The seller can reject all of the offers.
Finally, remind your buyer that there are no guarantees in real estate. You may guess what a buyer will do based on your past experiences. However, sellers sometimes follow unexpected patterns.
Handling Multiple Offers as a Seller’s Agent
Of course, as a seller’s agent, you want multiple offers to present to your client.
Sometimes real estate agents use strategies to get multiple offers, like deferring showings until days after the house has been listed in the MLS, to create excitement for the property. Some agents encourage their sellers to set a deadline for offers to allow multiple parties to make an offer.
Here are some tips to share with sellers facing multiple offers.
- A house may not be worth the money being offered – which means the appraisal could come in low. This means the lender may not finance the amount the buyer requested.
- Cash offers are preferred, as there’s no need to worry about a buyer getting a mortgage or the home appraising for less than what is offered. Cash offers are also more convenient and often have a faster closing date.
- Some offers will come with an appraisal gap guarantee clause, which means the buyer will cover any gap between the agreed-upon sale price and the appraised value.
- You may consider a lower offer if the buyer doesn’t ask for an inspection contingency. This means that you won’t be faced with any surprising repair bills. Of course, look for home sale contingency, which could prolong the closing. For the seller – fewer contingencies are better.
- Take an offer that best suits your goals, regardless of price. For example, some sellers need a quick closing. Others want to avoid home inspections. Still, others are looking for a hassle-free experience.
Here’s what NOT to do if your client has received multiple offers.
Do not drag out responding to offers in an attempt to get more. This will irritate the buyer, and they may continue their search for their dream property while waiting.
Do not use a bad offer to get more from another buyer. Even if someone offers well over the asking price, that doesn’t mean they can make that offer happen. Using a bad offer to try to get more from a buyer may backfire.
Learn More About Dealing with Multiple Offers from Colibri Real Estate
If you took your pre-licensing courses through Colibri Real Estate, you learned your state’s laws regarding the disclosure of multiple offers. You also learned how to write an offer for a buyer to protect their best interests while at the same time helping them purchase their dream home.
But there’s always more to learn. Laws change, and the market fluctuates. Stay on top of the real estate industry by taking continuing education courses through Colibri. We offer the best CE courses for real estate license renewal.
Become a better agent by utilizing the resources offered by Colibri Real Estate. Visit our website to sign up for CE hours today.