What is a multi-offer situation? This is when one property receives more than one offer from different buying parties at a given time. In today’s market, multi-offer situations are becoming part of the norm giving sellers different contractual options to choose from. Although this sounds ideal, there are many pros and cons that all buyers and sellers need to understand when in a multi-offer situation for a home. Our team put together a few tips from both the buyer and the seller’s point of view to think about if this happens to you:
Buyer Tips:
Always have a backup plan:
In a multi-offer situation, there is a good chance that your offer will be declined. If you are in a situation where you MUST have a home as soon as possible, always have a backup in mind, whether it is another home or just somewhere for you to stay. Even though you may love the home never pay more than what the home is worth. Always keep in mind that the home will also serve as an investment and you do not want to have negative equity as soon as you purchase the home.
Understand the appraisal process
Make sure you understand completely how the appraisal process works. The appraisal is based on on a few factors such as the ‘check-up’ or the inspection of the home as well as other homes that are similar that have sold in the area. The lender will only lend what the appraisal total is of the home and often this gets into different negotiating situations.
Know what the sellers want
It is a great idea to have your agent reach out and see what is most important to the sellers to secure the home. Often you can have yous agent write these into your offer on the property. For example, the bottom dollar may not be what motivates the seller but a quick closing. By reaching out to see what motivates them can make your offer stronger and stand out to the sellers.
Seller Tips:
Don’t take the highest offer
Even though taking the highest offer may be your first instinct, it could potentially hurt you in the long run. When in a multi-offer situation, you need to make sure you look at all terms of the contracts before making your decision. For example, even if one offer is higher it could have concessions such as:
- Asking for closing costs to be covered
- Their home must sell first in order to close
- Home Warranty
- Personal Items: Refrigerators, Wash and Dryer, Microwaves, etc.
Understand all the terms
Make sure your agent goes over all the terms for each offer in fine detail and don’t be afraid to ask questions about certain items in each offer. Depending on what kind of loan the buyers have qualified for such as FHA, VA, etc. This can determine things like inspections, appraisals or limitations to the sale price of the home.