How to Win in Multiple Offer Situations
Back in the height of foreclosure activity, a multiple offer situation in buying a foreclosure home was common. Sometimes a bank would even hold the listing for a period of days after it went into MLS to collect offers and then give every offeror the opportunity to make 'highest and best' offer. With housing inventory low, even traditional sellers are considering the same scenario of calling for highest and best offer instead of choosing one to counter.
But what is 'highest and best?'
The highest offer is not always the best offer. Most agents tell a buyer that earnest money should be about 1% of purchase price. While this is customary, it is certainly not the way to make your offer stand out, especially if there are other offers on the table. And in today's world, I assure my buyer clients, "If you love this house, someone else is out there looking to buy it as well." So, why not go in with the absolute most earnest money possible?
Buying the property "as is" with no due diligence period or a very short due diligence period along with an increase in earnest money over the typical 1% is guaranteed to get your offer attention.
A due diligence period of more than 5 to 7 days and extended financing and appraisal contingencies make your offer less attractive when compared with a cash offer. I recently worked with a couple paying cash. They kept losing out on multiple offer situations to other buyers also paying cash. They were making initial offers of about 5% off list price. When I pulled recent list to sale ratios, we saw that a realistic expectation was no more than 1.5% off of list price. These buyers eventually made a full price backup offer on a house, and then that offer became the primary offer when the first buyers had some issues with the home inspection they couldn't get past.
Don't base what you'd offer as highest and best simply on the list price. What would you give if there was no list price? Some buyers don't even consider the option of paying more than list price.
We are seeing record numbers of buyers paying cash for real estate. So it's important to structure your offer as clean as possible if your offer is contingent upon financing and it is a house you really want.
If you are considering buying or selling a home in Northeast Georgia, I hope you'll consider contacting me. I work with husband, David Stovall, my mother, Joyce Waters and sister, Kayla Shoemake. As natives of this area, we know North Georgia Real Estate.
Like my Facebook page
Selling North Georgia Since 1988