Multiple counter offers:
The last several transactions I have been involved in have all involved multiple offers. Buyers tend to be frightened by the concept of multiple offers fearing that they will get drawn into a “bidding war” and end up paying twice what the house is worth. Sellers salivate over the idea of getting multiple bidders to pay twice the market value for the 3 bedroom, 2 bath gem they are trying to sell. Both need to take a deep breath.
Yes prices go up during a multiple offer situation… but not by that much. Here is why: Buyers approach home buying with a budget, and I have yet to meet a buyer who does not want more home than they can afford – which means they are almost invariably looking for homes at the top of their price range. So even if they are WILLING to pay twice market value when they find the perrrrrfect home, they often CAN’T. Are they able to offer more than their initial bid? Usually. A negotiation is a conversation and an opening bid is a way to say “hello!” But how much more a buyer is able to pay is usually not a LOT.
So how does one win a multiple offer situation if they lack the ability to bring a wheelbarrow full of cash to the party?
Easy, the same way a person should approach every negotiation – negotiate a deal, not a price.
When a seller accepts an offer on their home, what they want, besides a wheelbarrow full of cash, is a smooth, worry free, trouble free close. They want to know that if they take their home off the market for 30 or 45 or 60 days that they are not waisting their time and missing other buyers. They want to know that they are going to GET their wheelbarrow full of cash. Often they have another purchase riding on this deal.
So imagine a theoretical situation where a seller is presented with the following 3 offers on a house listed at $210,000.00:
$220,000.00, Closing date is contingent on the buyers selling their property – their home currently has no offer. 21 days to do every conceivable inspection and test, $1000.00 in earnest money, and no pre-approval accompanies the offer.
$210,000.00, Closing is in 45 days, Buyer has 12 days to do a standard home inspection, $4000.00 in earnest money, and the offer comes with a pre-approval letter from a bank known by the seller.
$208,000.00, NO Inspections, buyer accepts the property AS-IS. Flexible closing based on sellers needs, $10,000 in earnest money, and a letter from the buyers bank verifying the availability of funds accompanies the offer. Oh, and the buyer agrees to pay the first $2000 of the sellers closing title fees.
If the seller accepts Offer 1, they MAYBE get an extra $10K… but who knows if that deal is going to close? No thank you. The risk of taking the home off the market indefinitely is not worth the possible $10k. This does not look like a serious buyer.
Offer 2 and Offer 3 are for essentially the same amount of money. I would be confident that either of them would close. So which one gets the house? The one with the most friendly terms. No inspections? Huge chunk in earnest money? No financing to worry about? Offer 3 every time. They offered a lower selling price, but they did make a MUCH stronger offer.
Want to make an offer on a home in a competitive environment and win? Call me.