7 THINGS YOU NEED TO KNOW ABOUT MULTIPLE OFFERS
1. What is a Multiple Offer?
As the name implies, bidding wars, or "Multiple Offer" is when two or more Buyers are competing to purchase the same property at the same time. This typically happens in what's referred to as a "Seller's Market", when there are more Buyers than available homes for sale and is more common in lower price ranges.
Durham Region is again experiencing a Seller's Market, similar to this time in 2015. As a Buyer, this can be frustrating - quite often you won't get the first house you make an offer on, or even the second or possibly the third. An experienced REALTOR® , who has successfully negotiated Sale Agreements in many Multiple Offer situations, is a key component of your team. TEAM BRYANT has extensive experience handling Multiple Offers and can advise you as to the best strategies to implement for your greatest chance of success!
For the Seller, this is the best type of market to be selling your home in. A well-presented, clean home that's priced competitively has an excellent chance of generating Multiple Offers, giving the Seller the opportunity to choose the offer with the terms and price that appeal to them the most!
2. How To Generate Multiple Offers?
A new trend emerging in the Durham Region real estate market is the practice of "holding offers". A Seller will list their home on the MLS system and permit showings, but they instruct their REALTOR® in writing not to accept any offers on the property until a specific date and time. This allows the home exposure on the MLS system and more prospective Buyers to view the home. There's a very strong possibility that this strategy could generate Multiple Offers for the Seller if the home is priced right and shows well in the right market.
An exception to this practice is a "bully offer". A bully offer is when a Seller has indicated that they will consider offers on a specific date, but a Buyer submits an offer in advance of that date with an irrevocable (expiry date/time) prior to the offer submission date and time.
Another strategy is pricing a home below market value in hopes of generating Multiple Offers which will bring the value up to market value or sometimes slightly higher. There is a risk in using this strategy in that the Buyer may need to make up a considerable difference if their lender uses the list price when determining the value in an appraisal.
Sometimes, it's just simply a case of location working in your favour. You have the right house in the right neighbourhood with the right schools and amenities and Buyers want to be where you are!
Supply and demand plays a significant role in multiple offers. An experienced agent will keep you advised on what the competition is in the area. What has recently sold and what homes are other potential buyers looking at? Team Bryant knows the area extremely well. With a proven record of selling homes OVER ASKING. Contact us today to discuss how we can help you generate multiple offers on your home!
As a Buyer, what strategies can help your offer come out on top?
3. What’s Important About Price & Conditions?
The two most important elements in an offer to a Seller are price and conditions. They are looking for the best price with the fewest conditions, or "cleanest" offer. The strongest offers will have no conditions, but we'll ensure you understand all the pros and cons of this strategy - it's not for everyone. One offer may be for more money, but be conditional on something like a home inspection, whereas another may be for slightly less money but have no conditions. The Seller may opt for the second offer in this case as it means their house is sold FIRM with no further risk and stress to them presented by the pending home inspection condition in the first offer.
Team Bryant will communicate with the Listing Agent to try to determine the Seller's "ideals" in order to be able to structure your offer to make it the most attractive. For example, determining the Sellers ideal closing date, a complete list of what's excluded or included in the sale, requesting copies of important documents, such as surveys, etc. Having this information ahead of time lessens the risk of a counter-offer or that your offer might be passed over in favour of one that has already addressed all of these issues and meets the Seller's requirements best without any alteration.
4. Is Mortgage Pre-Approval Important?
Pre-approval by a lender accomplishes two things; it gives you a price range you know you can comfortably afford to be in, and it demonstrates to a Seller that you are a serious Buyer in a Multiple Offer situation and can give your offer more strength over one from an unqualified Buyer. Team Bryant can suggest lenders that can get you the pre-approval that you are looking for.
5. What Are The Finer Details?
Team Bryant will work with you to construct a clean, attractive, strong offer based on your instructions. The goal is to submit an offer that is acceptable as it is, represents your "best foot forward" and requires few or no changes. The cleaner the offer, the better!
6. Is Presentation Important?
Whenever possible, your Sales Representative should be willing and able to present your offer to the Seller in person. This allows your REALTOR® to put a "face to the name", so to speak and brings emotion into the equation. Without revealing identifying information, your REALTOR® will tell the Sellers a bit about you and your hopes and dreams for their home. This has been the deciding factor for the winning offer in Multiple Offer situations more often than you would think!! This is not always an option, as Sellers can dictate that they only want offers presented to them by their own REALTOR® s. If that's the case, a personal letter accompanying the offer can also prove beneficial.
7. What Is An Appraisal?
Banks and lenders are conservative and don't like risk. This is common knowledge. But how does it factor into Multiple Offers? Believe it or not, this one thing can kill a deal before it's firm OR right up until closing on a firm Agreement. Your lender may use the list price of the home when completing their appraisal, versus the final sale price, which may have been inflated as a result of Multiple Offer. What does that mean? Well, if you paid $10,000 more than the list price of the home, you're going to need that additional $10,000 available in cash on closing in order to purchase the home. This is in addition to your down payment.
Putting your best foot forward is generally the best way to approach a Multiple Offer situation. You and your Sales Representative will discuss the various scenarios and options and construct an offer that is comfortable for you, protects your interests, and offers the Seller the best terms you are willing and able to give them. In most cases, you will be told just if your offer was accepted or not. Sometimes, there may be one or more offers that are essentially identical. In this case, the Seller's Sales Representative may give those Buyers with similar offers an opportunity to better their offers. This is again where it's best to keep the big picture in mind and not get carried away. If the home is perfect for you in every way and you have the ability to better your offer and aren't willing to let it go quite yet, then bettering your offer may put you on top. If it doesn't, chalk it up to experience and get back out looking at homes. Team Bryant has a philosophy that if it is meant to be, it is meant to be. There are other homes available and we will do everything in our power to make your dreams become reality!
If you have any questions about Multiple Offers or any other general real estate questions you may have. You can reach us at BRYANT@SUTTON.COM OR 905-441-7733. We look forward to talking to you in the near future.