May 18, 2017
Multiple offers to purchase a home are typically a welcome occurrence for sellers but a source of frustration for buyers. Unfortunately, there isn't a one-size-fits-all means of handling situations involving multiple offers. However, understanding the nuances involved can help facilitate negotiations while mitigating the potential for misunderstandings and unrealized opportunities.
Where sellers seek the highest price and best terms for their home, buyers aspire to purchase for the lowest price possible under terms favorable to their respective needs. Whether representing the selling side or the buying side of a transaction, real estate professionals can help their clients navigate the complexities inherent in multiple purchase offers, while helping them achieve their real estate goals.
When sellers put their homes on the market, they generally seek to capture the interest of as many prospective homebuyers as possible. In certain instances, a seller may receive more than one offer, increasing the odds they'll sell their home at a higher price.
Sellers who've received multiple offers are generally afforded four options. One, they can choose to accept the best offer from those received. Two, sellers may choose to notify all prospective homebuyers that multiple offers were received, inviting them to return with their highest and best offer. Three, sellers can elect to counter a single offer, while setting all other offers aside pending a decision. Or four, they can choose to counter one offer while rejecting all others. However, knowing which of these four strategies a seller should employ can be a complex decision.
Sellers who seek the guidance of a real estate professional regarding the prospect of multiple offers are often better equipped to make informed decisions. An experienced representative will have the ability to explain and present all options. But sellers need to also understand, although their agent can provide insight, decisions to accept an offer or initiate a competitive exchange would be at their discretion. A seller must further understand there's no discernible means of determining how a prospective homebuyer will respond to a seller's proposed counter-offer. Some buyers may be open to negotiating while others may refuse to engage in the process.
Regardless, in situations where multiple offers have been received, sellers must weigh the options. Should they choose to initiate a bidding competition, they'll want to convey to each homebuyer that multiple offers are under consideration. Albeit, doing so may also increase the likelihood some homebuyers will choose to move on to other properties. But competitive environments sometimes result in a seller recognizing significantly greater returns.
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When homebuyers submit an offer to purchase a home and then discover they're poised to compete against other prospective buyers, the dynamics can prove complicated and frustrating. However, buyers who've adequately prepared for the possibility of multiple offer situations are better positioned to make informed decisions.
Yet, as with sellers, there are strategies a homebuyer can also employ when negotiating within multiple offer environments. Understanding market conditions and seeking the counsel of a real estate professional well-versed in market trends often proves beneficial for buyers. It's in these situations where experienced agents can insightfully explain the competitive arenas in which multiple offers are being considered. A buyer who's unaware of market conditions may unknowingly offer too much or too little on a property and this can result in overpaying for a home, a tumultuous bidding competition, or a lost opportunity to purchase.
It's important to note, sellers seeking to capitalize on the interest of several prospective homebuyers may inform other prospects that several offers have been received. Details of an offer may become known as sellers seek to competitively position buyers against one another. Although a level of confidentiality is expected, the direct or indirect disclosure of a seller's terms and conditions is often indicative of what they expect to receive. Buyers should therefore weigh their options and decide if the perceived price point and terms are acceptable.
Buyers must also understand there's a possibility their real estate agent may be working with other would-be homebuyers sharing a common interest in the same property. To that end, buyers must openly discuss how multiple offer situations would be negotiated if other clients also expressed an interest in purchasing the same home.
Beyond price, when a homebuyer submits a counteroffer, there are other considerations that may potentially strengthen their competitive position. A strong earnest money deposit, the removal of contingencies, providing sellers with additional time to move or allowing an optional leaseback, may further serve to help a buyer bring forth a compelling offer edging out other prospective homebuyers. Regardless, buyers who find themselves engaged in situations involving multiple offers shouldn't expect sellers will willingly encumber extraneous costs nor should they demand the transfer of personal items not provided within the listing agreement should they wish to remain competitive.
Whether representing the seller or the buyer, real estate professionals on both sides of the transaction have an obligation to effectively counsel their clients. Further, they're expected to objectively present and address all offers in writing while cooperating with other real estate professionals.
As to be expected, only one offer will be accepted. Understandably, outbid homebuyers are apt to feel disappointed. However honest interactions and maintaining integrity throughout the process will make the exchange easier for all parties.
Sean and Aimee McDonald, Realtors with RE/MAX North Lake Tahoe, can be reached at 775-250-8335 or firstname.lastname@example.org.