MULTIPLE OFFERS - WHAT REAL ESTATE BUYERS & SELLERS NEED TO KNOW
Many buyers are out there watching their emails to bring daily notifications of new listings and waiting for 'the house' that will be home. Given today's tight housing inventory, it's not unusual to discover that there are multiple offers when the buyer's offer gets in. In most instances, even if the house is not bank owned, the seller will issue a Multiple Offer Notification, offering each buyer the opportunity to make their 'highest and best' offer with a deadline of typically 24-48 hours.
Now that the flow of foreclosures has stemmed dramatically, it is often a house that's not bank owned receiving multiple offers. The seller can choose to accept any of the offers, counter any one of the offers, or issue the Multiple Offer Notification, allowing each buyer to turn in highest and best offer.
What is highest and best? The highest offer, monetarily, could easily not be the best offer. The best offer will typically have few or no contingencies, the less the better.
I have been involved with four multiple offer scenarios during the past month or so. In three of these, I represented the seller in three of these and the buyer in one. A bank was not involved in any of these. However, one was a foreclosure being sold by some sort of investment outfit. The buyers’ offer was submitted at 10% above list price and rejected, along with four other offers. The listing broker then told me that the investors decided to pull it off the market and take it to auction. The listing agent sounded about as frustrated as I and my buyer clients are. This just goes to show that when you’re doing everything you can to get the house, you still sometimes lose out.
A Lake Lanier house I recently listed had multiple offers. My advice to the seller was to call for 'Highest and Best.' (Some agents don't mention to sellers that this is a possible option). We received one offer at $350,000 that called for a ten day Due Diligence period and a financing contingency. Another offer came in at $335,000 with a closing in one week. The buyers agreed to accept in 'as is' condition. You can probably guess which one the seller accepted - the offer for $335,000 'as is' that was closing in a week.
The other two offers in which I represented sellers both resulted in better than list price sales, which brings us to the topic of pricing the home right. Had these homes not been priced right, there would not have been multiple buyers with offers in hand. When discussing a list price recommendation with a seller, I typically suggest a range with a suggested list price and a list price I wouldn't recommend exceeding. I lose out on many listings because I don't tell a seller what he or she wants to hear. In the end though, I don't think it's really a loss.