How to Make a Final and Best Offer on Homes in a Multi Offer Market
Good information for all agents. Sharing for others to learn.
Making a Final and Best Offer
Gated waterfront condos in NE Philadelphia are at a premium right now. I have a list of buyers waiting for these condos to come on the market. There was a time these units just sat on the market. This was many years ago when the Real Estate market crashed and I would write in my posts should have could have would have. Well, now these days have come and gone.
The last few condos went well over full price. In fact, one the buyer really liked or shall I say loved had a story of.woe. We knew there would be multiple offers. I called the buyer and we discussed what were they willing to offer as their final and best offer. We had already offered over full price but I felt we needed to offer more. They would not get a second chance. I find most people think they do get another chance. I have to explain no not with multiple offers they take the best and that is it. Done over the best offer wins. There are no second chances. We are making our final and best offer.
We decided to go ten thousand over asking price. It was a cash offer without any contingencies. We felt good about this offer. The condo was nice had a great view but needed updating. It was also listed under $200,000, therefore, $10,000 over asking was in our opinion a great offer. It was a really strong offer we felt really good.
OFFERED RE-JECTED
The next day I received a voice mail there was a higher offer and better offer that was accepted I want you to understand the listing agent also had a buyer and an agreement on this property. The buyer was not the listing agents. The accepted offer was from another agency. Same terms but higher price. I had that sinking feeling in my stomach. I was so upset. How could I tell the buyers they lost the condo. I felt sick inside
This was not the first property they have lost in this community. I had to call and tell them it just wasn't the right property for them another one was out there waiting for them. They would be so upset. I knew it would be best to make the call right away without delay.
Their first reaction was we will stop looking but this passed. I am a firm believer in there is another one a better property waiting for them. After all, this one was nicer than the other properties they had lost. So we are waiting patiently for the next one. the perfect property. The one that is saying "Wait for Me I Will be on the Market Soon"
Are You Prepared to Do What it Takes?
My other clients had to go $5,000 over asking price Another cash offer they knew the fan in the bathroom needed to be replaced and the closeted door was off the track but these were little inexpensive items. Again we were in competition with other buyers. Really is it worth losing property for a fan that needs to be replaced in a bathroom they said?
My client had friends living in this development. They saw a steady stream of people going in and out of this condo. They saw two people with an agent at the property for the second time. They told their friends not to play around if they wanted this unit.
I had shown them the condo that had sold well over $10,000 of the asking price. They had not liked that one but this one had everything they wanted. They were hesitant in making this offer but agreed to do $5,000 over the listed price. Without a home inspection
Thankfully their offer was accepted. They are very excited and have made the appointment to interview with the condo association to discuss the rules and regulations which they have received. Next week we have permission to from the listing agent to go back in the property and measure.
Are you really approved?
Now the Spring market is almost upon us. I am sad to think about what will happen if buyers are not prepared. There are many communities in high demand. Buyers seeking a mortgage or who have a house to sell in the Spring even now have trouble competing.
Buyers call me and say I will not have any trouble selling my house. This may be true but good luck telling that to the listing agent. If the buyer needs the funds from their house to close or does not qualify with two mortgages they have a problem. You must remember most buyers in the Gated Waterfront Communities have cash. It is true in the end the seller gets the money but cash is an easy sale with no worries for the seller.
No worries whether the house will sell. No worries or concerns will they get the mortgage?. Cash is cash no worries a sure stress-free transaction. That is the transaction that is best for the seller. That is the fiduciary duty the listing agent has to the seller. The fiduciary duty the buyer's agent has to the buyer is to make them aware of this position they are when they go to buy one of these properties.
If the buyer can prove they do not need to sell their house to buy that is a horse or a different color. Perhaps they have a bridge loan lined up. That is the same thing as they have checked it is a cash sale and not contingent on mortgage financing. Perhaps they are approved for their mortgage and not concerned so they check not contingent on mortgage financing. They do however want the property to appraise for the sale price.
Most of all do not start to look without sitting down with your agent and discuss your wants and needs. Have your documents ready and proof of funds on hands so when you find that perfect place you can act on it.
If you decide you may need to do financing your agent has mortgage bankers that can help find solutions. These are issues that need to be addressed before searching for the right home not once we find it. Waiting until after we find the perfect house could very well especially in a hot market like this one cause you to lose the opportunity to purchase a house. There are steps to purchasing a home and this is step number one. Not the last step so let's not skip steps. Let's take it one step at a time..
If you will not have trouble getting approved for a mortgage let's get you approved
What is property worth?
Recently I had an agent that a put a clause in a cash offer that it had to appraise for the sale price. I was very fond of this agent and would have loved to have closed his offer but I had two other offers. His was the only one with this clause and his answer was "why should his buyer pay more than the property was worth"
My answer to him was something I learned when I first started Real Estate. It is my professional opinion and I stand by it. A property is worth what a buyer is willing to pay for it. He looked at me and shook his head and said I was wrong. I then said an appraised value was a professional opinion of value. It was not carved in stone. It could be appealed. He was very annoyed with me.
To be honest I did not think it would not appraise for the value it was going to sell for. As I said it is one person's professional opinion of value. One never knows which way the pendulum swings. The first eighteen months in Real Estate worked in appraisal office so I know how it may work. He lost the house for his buyers for being insistent. He would not take this clause out of the agreement of sale. I did not feel it was in the best interest of the seller to accept his offer when we had two other offers without any contingencies
When you do your best and you still do not get the property I am a firm believer it was the not the right place for you. I have been selling houses since 1985 and I have seen it happen every time. Sounds like ages ago and I love what I do finding that right home for someone gives me that wonderful feeling inside and it will give you that feeling inside when you find that special place that is home. You may be disappointed a few times and lose a couple on the way but when you find the right one it will all be worth it
Having the Best Agent for You
Your agent should have you set up on a portal. There is no reason you should be calling other agents because your agent is too busy for you or went on vacation. If your agent does not return your calls or went on vacation without leaving an associate to take care of you. You need a new agent. Plain and simple. You should receive a call back the same day. If you do not know what a portal is you need a new agent. Unless your agents MLS does not have this feature or it is called by another name.
The Portal
Your agent sends you listings that meet your criteria. This email allows you to view the listing and respond if you would like to see it. It also gives you the ability to search the area for listings and share them with your agent. It eliminated the need for you to go to third-party sites and allows you to use the same tools we use as agents. Thus saving steps and making things easier so you are receiving much more updated information.
Respect your Agent
Your agent has a fiduciary relationship with you. He is not telling you to offer over full price to make more money. The small percentage he is going to make is not worth his honor. I would hope after all this time you trust your agent. Uncle Joe, Aunt Liz and your friend down the street all have their opinions but your agent is the professional and knows the market. The truth is if the agent thinks it is not necessary they will say so. Trust and respect are needed in a Real Estate Transaction. Remember there are many areas where there is a shortage of listings. Your agent will know just what areas they are.
The agreement is accepted
When the offer is accepted. There is still work to be done. If there is a mortgage full application must be made. There is information that is needed to be given to the Title company. You may be asked how you want to take the title. Now don't go out and start buying everything until you settle the house. We do not want to be short of any monies.
We want to make sure we have clear title free of all leans and judgments. We can then schedule a time and place according to the contract. Finally, all that time has paid off we thought we would never find that house but we did. What a great feeling
It takes patience time, perseverance and the right combination. Sometimes you get lucky and you find the right house the first time out. Everything goes your way and there are no problems. Don't think you have to keep looking. Thank your lucky stars that you made your best and final offer that was accepted.
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