There are a lot of different factors that are considered when a listing agent receives more than one offer on their listing. Some that come up first and are important are the intangibles that are not really talked about much. The decisions that weigh in, that will make a difference are the networks that are already established in the industry, how much experience a buyer’s agent has; whether they have met listing agents at the local caravans? Are they with a large company, do they have a managing broker or are they a lender slash agent? Basically, what is their general character and reputation? Most of all, have they established good working habits in the eyes of the listing agent? Each listing agent will have a different way they approach every offer that ends up in front of them.
What follows is what sets some offers aside and a few others above the rest. If everything discussed above are all unknowns and rarely is the case that they are, how an offer gets chosen with all else being equal, then the main goals of a good offer are:
Good Presentation – How was the offer submitted? Were there instructions to follow that the buyer’s agent overlooked? Most offers are faxed or emailed these days, but some agents still prefer to call a listing agent to let them know the offer is on its way. Some agents are writing so many offers, they may have overlooked that they have not changed the address on an offer for a different property. What do you think a listing agent’s impression of that oversight would be? Details are so important when making offers, as well as what an agent leaves out. If they don’t even take the time to put in the listing agent’s contact information or license number because they don’t think it matters, then why would the listing agent want to work with someone who doesn’t take the time to write those details in?
Fair Market Price – This is the most strategic factor in the offer, especially when there are multiple offers. Whether a buyer is paying cash or has a loan plays a large role of where this amount ends up. Some cash buyers feel they can be tougher and put in lower offers because they can close escrow faster, but on the other hand, if they are dealing with a seller that wants more money and has the luxury of time, their low offer may just be bypassed. After all, maybe the seller wants a first time buyer to take care of their home for many years, instead of an investor that is just going to flip his home to make a profit.
Lack of Contingencies – Many times, and especially now when there are multiple offers on highly desired homes, this is where a buyer can outsmart their competition. If they are more committed to a property, then they may not choose as many days to drop their contingencies. If they are financially stable and really sure of what they want, then maybe the only thing that matters to them is the inspection. They may choose to drop that contingency within 10 days, instead of the customary 17 days. That’s a huge difference to a seller that needs to be sure about a buyer’s intentions.
Larger Down Payment – This is a big consideration because it will play a key role in how a loan is eventually processed and approved. Where the appraisal “comes in” also makes a difference, and whether the buyer has enough funds to make up for any shortfalls, will determine their ability to purchase their dream home, should the appraisal be lower than they offered.
Timing of the Close of Escrow – How flexible is the buyer for the seller’s needs or wants in this market? What if the seller needs to sell their home to buy another home and a buyer can’t close in time because they have to wait for their own home to sell? Their ability to close on time is monumental to most sellers. And this, of course, goes back to what the seller really needs.
If a buyer wants to come out on top, their agent really needs to find out what the seller really wants, and then negotiate the offer to fit the SELLER’S major concerns. What is often overlooked when drawing up an offer, is that it’s not always about the price; sometimes it’s all about the terms. If a buyer has less concerns about certain things that need repair, or are flexible with the timeframe of when they need to close, that might just be the kicker they need to tweak to get their offer accepted.