In a seller’s market, multiple offers are not uncommon. But what does that really mean and how should you and your agent work together to generate the most interest in a multiple offer situation?
When inventory is tight and a market heats up, sellers often dream of finding themselves in a multiple offer situation. In a multiple offer situation, more than one potential buyer submits a written offer on the home. With multiple offers on a property, the listing agent can then try and “shop the top offer” in order to try and get the best deal possible for their client.
If you live in a hot market, how do you structure your listing in such a way that you get the best possible offers in a multiple offer situation?
One strategy for cultivating multiple offers is letting buyers know that the seller will only entertain offers on a certain date. Rather than deal with offers dribbling in one at a time, there’s a deadline for offers. When this happens, buyers know they have to have a truly exceptional offer on the table if they hope to be in the running for the property.
With a deadline on offers, buyers will look at ways to gain an advantage over other offers. This often extends beyond pricing, though pricing is a part of the picture. “Escalation clauses” are frequently built in should a buyer’s offer find stiff competition from another buyer. The clause ups the amount the buyer is willing to pay in the face of a legitimate competing offer.
In addition to escalation clauses, buyers may also waive other terms and contingencies relating to inspections, title, or financing. In some multiple offer situations, an all-cash buyer will have a considerable advantage over those who must still navigate the additional complications of their financing.
Be aware that in a multiple offer situation your agent may not be eager to try and instigate the next level: An all out bidding war. While the agent has an obligation to secure the best possible offer for your listing, bidding wars can generate a lot of bad blood between agents who have worked together the past (and hope to work together in the future). Some sellers will push an agent the direction of a bidding war, but those who do must realize there’s an inherent risk in making an enemy out of buyers and buyers’ agents. (Everyone has their limits!)
Do you live in a market that’s hot? How in demand would your home be if it happened to be on the market right now? Have you talked to an agent about the prospect of generating multiple offers on your property? Contact me, your trusted real estate professional, by phone at (905)940-3599 or by email at firstname.lastname@example.org today and I can help answer all of these questions and more: