Let’s face it — the current market lends itself to multiple offer situations pretty easily. So how do you best position your buyers and sellers to negotiate multiple offers? Use these FAQs to direct the conversation.
MULTIPLE OFFERS FOR BUYERS
How do I explain the possibility of multiple offers to my buyers? First of all, explain the market to them. If you’re showing in a competitive area and price point, let your buyer know what this means and how they need to respond to this climate. Are they willing to be in a bidding war with other buyers? Would they be willing to accept a property in its present condition?
How do I make my offer stand out? When your buyer gets their heart set on a competitive property, make sure their pre-approval letter is rock-solid. Then, write the offer with as little fluff as possible. You can also reach out to the listing agent and ask about what’s important to the seller — and then use that knowledge to enhance your offer.
What if the seller goes with another buyer? Ask if you can submit a back-up offer. Be prepared for the potential of more rounds of negotiations — the sellers may accept as is, or they may want to counter offer. If do they counter offer, everyone needs to sign the offer as normal mark the other and write “back-up addendum.” Once accepted, add an amendment stating that the offer was accepted as a back-up, per the attached addendum. Keep in mind that the listing agent must initiate the back-up addendum.
Can there be multiple back-up offers on a home? Yes. However, earnest money cannot be delivered unless your offer is in first position. Likewise, the inspection period doesn’t begin until you’re in first position.
MULTIPLE OFFERS FOR SELLERS
How do I talk about multiple offers with my sellers? Ask them how they want you to handle the offers. Explain the pros and the cons of going with the highest offer — the type of loan, earnest money amount, lending institution and other terms factor in, as well. If the buyer pays over asking price, buyer’s remorse may kick in, and they’ll be looking for a win. The inspections could be where they look to cash in, even if they chose “in its present condition.” Prepare your sellers for a Resolution of Unacceptable Conditions that could be full of requests.
Do I have to tell the buyers agents about other back-up offers? If you have a back-up offer during the inspection period, you don’t have alert the buyer’s agent unless they ask. If they do ask, you have to tell them.