Why We Chose Your Offer

By
Real Estate Broker/Owner with New Paradigm Partners LLC EB #1326335

There have been so many excellent entries to Debbie Reynolds' contest sharing strategies for dealing with high demand/low inventory markets that it is unlikely that, rack my brain as I might, I could come up with something new, unusual and worth your time to read. But I did want to participate, so I have decided to approach it from the other side, by taking a look at how we handled a multiple offer situation on a recent listing.

 

The home was a mid-range 4 bedroom, 80's bi-level in excellent condition that hadn't been updated. We priced it at the top of the range for those homes in that part of town, and after just two days, we had 11 offers. We made a spreadsheet that compared them across the 7 categories that would be important to our sellers in deciding which to accept. Here's how that played out:

 

Price: We were all  over the map on this. Two offers came in below asking, in spite of knowing they were competing, which moved them to the bottom of the pile. 5 were over asking, and all of them used an acceleration clause, one going up as high as $30k over asking. Those 5 all went to the top.

Terms: 2 of the 11 were cash, 6 were at least 20% down, 2 were FHA. Our sellers focused on the cash and larger down payments.

Lenders: All of the offers with loans had pre-approval letters. Most buyers were using reputable lenders, but 2 were from internet lenders, and one was from a local lender of questionable repute, with whom we had difficulties several times over the years. Those went directly to the bottom of the pile.

Closing: The two cash offers had quick closings, which our sellers really wanted. All of the others were 30 to 60 days.

Appraisal: Both of the cash offers waived appraisal, and two of the offers with loans agreed to cover the difference between the purchase price and appraised value if the home didn't appraise at the purchase price, providing that it appraised at or over asking price.

Inspection: 2 of the offers waived the inspection contingency, and 3 others committed to asking for major items only.

Intangibles: We looked at a couple of other things that might have had some bearing but weren't contract items. The first was the reputation of the selling agent. We knew and had enjoyed working with many of them, knew of several more, and didn't have any knowledge at all of a couple of them - there were no real issues here. Several offers were accompanied by letters. Our sellers read them, but none rung a bell with them and they didn't really factor into the final decision. And almost all were clean, complete offers with no obvious problems.

apples & orangesSo what did our sellers decide? In the end, it came down to 2 offers. The first was cash, $20K over asking, a one week close, and waived inspection and appraisal. The second was a 20% down loan from a great local lender, $30K over asking, a 30 day close, and acceptance of any appraisal difference.

 

In spite of the $10K purchase price difference, our sellers ultimately gave more weight to the cash, the quicker close, and the waived inspection. Being from out of town, and settling an estate for a relative, they wanted something quick and easy. Not having to deal with inspection items nor worry about a loan process, and being done in a week, gave them everything they wanted.

 

What did we learn? The sellers made the best choice based on their own unique motivations - factors the selling agents didn't know and even we didn't fully understand until it came down to decision time. More than half of the offers were complete, professional, and competitive. Any of those could have won the day. And we couldn't have guessed the outcome.

Posted by
Mary & Dick

Mary & Dick Greenberg
New Paradigm Partners LLC
2601 S. Lemay Ave. #41
Fort Collins, CO 80525
970-689-4663
www.maryanddick.com

 

Data Source: IRES MLS

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Re-Blogged 4 times:

Re-Blogged By Re-Blogged At
  1. John Meussner 04/26/2017 02:32 PM
  2. Sheri Sperry - MCNE® 05/05/2017 04:00 AM
  3. Kasey & John Boles 04/29/2017 09:24 AM
  4. Roy Kelley 06/06/2017 01:00 AM
Topic:
Home Buying
Groups:
Active Rain Newbies
The Lounge at Active Rain
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Tags:
multiple offers
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Rainmaker
2,556,126
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

A cash offer over list price often has a lot of preference when it comes to multiple offers.

Apr 27, 2017 02:57 AM #26
Rainmaker
1,445,996
Kat Palmiotti
406-270-3667 (MT), 914-419-0270 (NY), Broker in NY with Grand Lux Realty and in MT with (coming soon!) - Kalispell, MT
The House Kat

This was a great way to address multiple offers!

Apr 27, 2017 03:48 AM #27
Rainmaker
1,518,442
Gary L. Waters Broker Associate, Bucci Realty
Bucci Realty, Inc. - Melbourne, FL
Fifteen Years Experience in Brevard County

The cleanest offer usually wins... I tell buyers to give it their best shot and you never know!

Apr 27, 2017 04:41 AM #28
Rainmaker
782,401
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtor, Philly Main Line

It is not always about the money, we just won a multiple offer situation because our buyer was very strong financially,much more so than other buyers and that felt good to the seller. We also were not the highest offer.

Apr 27, 2017 06:23 AM #29
Rainmaker
2,463,774
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Here are the essentials and core of the deal that all pros wield case in point

Apr 27, 2017 07:04 AM #30
Rainmaker
559,831
Tim Maitski
Atlanta Communities Real Estate Brokerage - Atlanta, GA
Truth, Excellence and a Good Deal

I pity the buyers who need to go with an FHA loan.  They don't have a chance until all of those 20% down buyers find their homes.  

Apr 27, 2017 07:19 AM #31
Rainmaker
2,189,919
Elizabeth Weintraub Sacramento Realtor Top 1%
RE/MAX Gold - Sacramento, CA
Put 40 years of experience to work for you

two of the offers with loans agreed to cover the difference between the purchase price and appraised value if the home didn't appraise at the purchase price, providing that it appraised at or over asking price.

This is very interesting to me that buyers would offer to only cover the gap in the event it appraised at or over list price. Here in Sacramento buyers are covering the gap between appraisal and sales price primarily BECAUSE it might appraise below list price.

Apr 27, 2017 07:23 AM #32
Rainer
258,739
Mick Michaud
Distinctly Texas Lifestyle Properties, LLC Office:682/498-3107 - Granbury, TX
Your Texas Lifestyle is Here!

Great perspective and analysis. Proving once again that cash talks.

Apr 27, 2017 07:42 AM #33
Rainmaker
1,948,762
Andrew Mooers | 207.532.6573
MOOERS REALTY - Houlton, ME
Northern Maine Real Estate-Aroostook County Broker

We run into multiple offer situations on water front properties. Had one where a guy was paying cash, another with family that offered less but granddaughter included a heart-wrenching letter about how her Grampy does not have many years to live. He would love being next to the water, staring into nightly camp fires, listening to loons and he does not have long to live. Is so lonely since Grandma died this past winter. Seller says pick them. That was back in the early 1980's and since have learned that is familial discrimination because one buy had kids, family, the other was a lone wolf old batch with an empty nest. Did not provide the extra handwritten in a fourteen year old's personal handwriting with pictures of grampy by the water and smiling ear to ear. Real estate is emotional, for buyers, sellers, their life situations. Pulling on those heart strings worked.

Apr 27, 2017 10:45 AM #34
Rainmaker
401,223
John Wiley
Right Move Real Estate Group- EXP Realty - Fort Myers, FL
Lee County, FL, ECO Broker, GRI, SRES,GREEN,PSA

I find that Sellers have many different factors that leads them to choose one offer over the other.

It is not always money. A Buyer attaches a letter to the offer explaining they have a young family and the house would be perfect for raising their children. The Seller always thought of the house as a family place and selected this family who had a lower offer.

 

Apr 27, 2017 12:40 PM #35
Rainmaker
421,828
Steffy Hristova
HomeSmart Elite Group Tempe AZ Tel: 480-966-9353 - Tempe, AZ
Tempe AZ Realtor - Your Home Close to Your Work!

Dick, what a great illustration of how short close of escrow can be very attractive. You have presented excellent analysis points for the Sellers to make their decision. I am glad the Sellers had the option to choose what worked best for them.

 

Apr 27, 2017 12:45 PM #36
Rainmaker
3,829,663
Dorie Dillard CRS GRI ABR
Coldwell Banker United Realtors® ~ 512.750.6899 - Austin, TX
Serving Buyers & Sellers in NW Austin Real Estate

Good evening Dick Greenberg ,

Excellent entry into the contest. Offers are are not all about price! Sellers do make decisions based on their own unique situations and they do vary! I enjoyed reading about the multiple offers and how you and the seller evaluated  each one and what you learned! 

Apr 27, 2017 03:58 PM #37
Ambassador
1,703,610
Tammie White, Broker
Franklin Homes Realty LLC - Franklin, TN
Franklin TN Homes for Sale

Dick, I used a similar process recently on a house with multiple offers. I found a spreadsheet was the easiest way for the sellers to see everything with so many offers.

Apr 27, 2017 06:54 PM #38
Rainer
479,439
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

Your seller was fortunate to close, yet, would you personally buy any real estate without an inspection and not get an appraisal? Paying $20k over asking priced at the top of CMV doesn't seem prudent to me under those circumstances but there are always exceptions to everything including real estate, isn't there? 

Apr 28, 2017 01:12 AM #39
Rainmaker
1,234,133
Sheri Sperry - MCNE®
Coldwell Banker Residential Brokerage - Sedona, AZ
(928) 274-7355 ~ YOUR Solutions REALTOR®

Hi Dick - Great example of looking at this challenge from a seller's POV.  The categories you discussed are very appropriate. I thought the creativity of covering the gap on the appraisal if it comes in over the asking was another good tactic. But it is almost like having a contingency. "A bird in the hand, vs 2 in the bush..."

Apr 28, 2017 08:06 AM #40
Rainmaker
773,582
Kasey & John Boles
Jon Gosche Real Estate, LLC - BoiseMeridianRealEstate.com - Boise, ID
Boise & Meridian, ID Ada/Canyon/Gem/Boise Counties

This post is well worth the feature and I think should be one of Debbie's top choices for the contest as well.  Looking at a real example from a listing agent and seller perspective is perfect for this post and challenge.  This is just awesome.  -Kasey

Apr 29, 2017 09:20 AM #41
Rainmaker
5,421,935
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Congratulations on your feature recognition.

Thank you very much for sharing this story.

Apr 29, 2017 09:59 AM #42
Rainmaker
3,633,428
Sheila Anderson
Referral Group Incorporated - East Brunswick, NJ
The Real Estate Whisperer Who Listens 732-715-1133

Good morning Dick. This is so insighful and may give agents and buyers too an idea of what happens in these multiple offer situations.

Apr 29, 2017 10:15 AM #43
Rainmaker
980,754
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Great post Dick!  Very smart of you to relay all of the specifics and compare, giving the seller all of the points that would help them make the best decision.  

May 01, 2017 06:22 PM #44
Ambassador
3,983,135
Debbie Reynolds
Platinum Properties - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

Hi Dick, It isn't always about the price. This is an excellent lesson and buyers and agents should take notice.

May 01, 2017 08:15 PM #45
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