What to Consider in a Multiple Offer Situation
We’re in the midst of the spring real estate market, and with that the flurry of activity is at its usual high. In some instances, we’re even seeing multiple offer situations. A general rule of thumb to keep in mind, home sellers, is that if the home has had ten showings and no offers, or been on the market for two weeks without a showing, that a price adjustment may be necessary to attract buyers in your neighborhood and price point. If you’ve gone longer, or haven’t received any offers yet, it’s not your house, it’s the market that is telling you that you’re priced too high. The message being delivered is whether or not the value is there in the eyes of the buyer for their dollar in today’s market, and buyers may be looking elsewhere (not your house) to find that value. When buyers recognize value when they see it? Enter a multiple offer situation. A “good” problem to have, your next decision is which one to pick, and how do you choose?
If you think that the price offered is the driving force of a “good” offer, you wouldn’t be alone. After all, in setting your list price there are a lot of factors that might go into that number. What’s recently sold, what’s going on in the rest of the market, and of course, the number that you’d like to receive at the closing table based on the value you have personally placed on your house. You’ve had that number in mind, so when an offer comes in that is near, at, or even above the asking price, versus offers that aren’t, it definitely will grab a home owner’s attention. Despite the leading attractiveness of price, however, other points of the offer should be taken into consideration when determining which offer to accept.
The type of financing that a buyer is using, as well as the amount of money being put down, is another consideration that a home seller should weigh when it comes to a multiple offer situation. Traditionally, a conventional buyer (buyers who put 20% or more down) will have more mortgage products available to them. With that, in all likelihood there is a greater ability to actually close the sale.
Contingencies are something else to consider when weighing offers. Contingencies, or conditions, are a significant portion of the purchase contract. These are items that must be satisfied within certain time frames in order for the sale to go through. Some examples are a financing contingency, satisfactory inspection contingency, or the buyer selling his house first, before buying your house. The more contingencies, the more to satisfy before closing.
And speaking of closing, that’s another item that sometimes gets put on the back burner behind the offer price. The further out a closing date, the more maintenance and monthly costs of running your house (include your mortgage payment) need to be kept up. If you need to move due to a life change and are under a bit of a time constraint (like job loss or transfer, kids starting school in a new school system, etc.), If your closing isn’t going to happen for 2 months, or another offer, 4 months, that might make one offer more attractive than another.
Not all offers are created equally. When reviewing an offer, or multiple offers, it’s important to read through the entire contract and look at it from a “whole” point-of-view, versus just the price being offered for your house.
Melissa Rolland is a licensed Connecticut realtor. She lives in Tolland, along with her husband Todd, a licensed broker. Together they manage the Rolland Realty Group at Keller Williams Realty. You can connect with them at www.RollandRealtyGroup.com.