If you’re selling your Boston condo, or any home for that matter, and you’ve priced it competitively for today’s market, where inventory is very limited, it’s quite possible – if not likely – that you’ll receive multiple offers in a very compressed time frame. In fact, many brokers are listing properties but delaying any showings until the first open house and then setting a deadline for review of offers within a one or two day window. This approach seems to be working well for sellers. If you’re a seller and in the enviable position of receiving multiple offers, you are in the driver’s seat.
You may ask your trusted broker, how do I deal with multiple offers? How do I decide which one to accept? First of all, you can give your real estate broker the green light to inform all parties that you have received multiple offers or have been told that offers are coming. With your permission, your broker can inform potential buyers that other offers have been submitted, but need not provide any specifics pertaining to competing offers. With this approach, you are likely to get stronger initial offers, which will ultimately work to your benefit. You can review all offers and accept one without further negotiation but most likely, you will want to ask for best offers, giving buyers the opportunity to give it their best shot. Buyers will likely put forth their highest price and best possible terms in the hope of having their offer accepted… a highly coveted position in this low inventory market.
So, what should you consider when evaluating competing offers? What makes one offer more attractive than another? Consider these negotiatiable terms:
- Price. If you have multiple offers for consideration, you are likely to be tempted to accept the highest price. As you consider multiple offers, keep in mind price is one important term that makes an offer attractive, but it’s not the only term in an offer nor should it be the only factor in your decision (albeit for most sellers, price is high on the list).
- Closing Date. The closing date can be a sticking point. When do you want the transaction to close? Do you want a quick close so you are free to move on to purchase your next home? Do you want to extend the closing date out several months to give you time to find another home or complete the school year in your current district? The flexibility of the buyers may be a high priority depending on your situation. Your broker can advise buyers of your preference for closing dates to factor into their offers so they can make their offer more attractive to you.
- Financing or Cash Transaction. Cash is king so most offers that are cash will have a leg up on offers that have a financing contingency. A cash transaction poses less risk to the seller of the transaction not being completed. If you receive offers with a financing contingency, which is most typical, you want to have assurances to the extent possible of the buyer’s ability to secure the funds necessary to complete the transaction. Your buyer’s financing is of utmost importance. I recommend that sellers require a pre-approval letter with any offer. While it doesn’t guarantee the buyer will be able to obtain the financing, it’s reasonable to assume the buyer’s lender will extend financing based on a complete assessment of the buyer’s financial situation. Although it is common to put down 20% and finance 80% of the purchase price, a buyer who is willing to put down more money (i.e., borrow less) may be considered a stronger buyer.
- Additional Contingencies. While home inspections are standard protocol in buying a home, as are review of condominium documents and financials if buying a condo, other contingencies may be risky. You should review all the contingencies stated in each buyer’s offer. An offer with a home sale contingency is much less attractive and riskier than an offer without one. If you have multiple offers, it’s unlikely that your best offer will be one with a home sale contingency. A buyer with fewer contingencies may be a better bet than one with more. The fewer contingencies, the stronger the offer.
For sellers, it’s exciting to have multiple offers, but when offers are quite similar it can be challenging to decide which offer to accept. Working collaboratively with me as your broker, we will outline the pluses and minuses of each offer and negotiate to get that “best and final offer” that best fits your specific needs and requirements, all things considered.