This can be a sticky one. You never really know if you are truly competing with another buyer. There are many unethical agents that will tell you that they think that there will be another offer in an effort to get my buyer to up their price to compete. I never fall for it. If there truly is another offer, the listing agent should give me the opportunity to change or rescind my offer prior to presenting to the seller.
What if there is another offer on the house that you want to buy?
The answer is never simple. There are several ways to negotiate when you are faced with a multiple offer situation.
Highest and Best Offer
First, you need to determine how much you really want THIS house. If this is the house that you can see yourself growing old in, then you should make your highest and best offer.
Shorter Response Time
If you were hoping to negotiate on the price, you need to create urgency by giving the sellers less time to respond. But keep in mind that the sellers are at work just like you are, so they may not be able to respond in 4 hours. But if the listing agent states that there are showings in the evening, you may want to give the sellers until that time to respond. This will force them to respond without knowing whether or not there will be another offer.
Creating the Best Terms for Acceptance
If the sold comparables show that the home is priced at the market, and the home has only been on the market for a week, you may want to offer really close to the purchase price. With such a buzz, the sellers are getting many showings and are anticipating that they may have multiple offers. If you are the first offer and it is very clean, the closing dates line up and the price is within range of the average list to sales price ratio, you have a better chance of receiving an acceptance. I will also encourage you to write a letter to the seller about your family and why you feel that THEIR home is the perfect one for you! This will personalize you to the seller. It really does help.
What if after we submit our offer, the listing agent asks for our best offer? What can we do?
You need to ask yourself a couple of questions:
Will I compare THIS house to every other house I see if I don't get this one?
Will I not be happy with any other option?
What is it about this house that makes it the best...for us?
You have 3 options when the listing agent informs us of a multiple offer situation.
1. You can rescind your offer and walk away. Basically, refuse to get into a competing bidding war.
2. You can keep your offer as it is.
3. You can raise your offer to your highest price that you are willing to pay.
Bottom line is this: If you have been looking for the perfect home for your family for a while, and this one is it, you should offer the best price and terms that you can. If it is meant to be, your offer will be selected by the sellers. Offering above the asking price may cause appraisal issues and you will feel like you paid too much. I would rather that you offer at market value based on the sold comparables in the neighborhood so that you know that you are getting a good value for your money. If another buyer wants to pay over and beyond that, we will find you a home that is even better!
Keep smiling!
Karen
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