The sellers received five offers for their home! While all were at or above asking price, two were significantly higher. They asked me if they could accept both offers. I said, “Absolutely – as long as you have two exact homes to sell.”
All kidding aside, sellers can accept only one offer. However, they could keep the second offer as a back-up offer. Or they could they could counter all offers (see first bullet point).
Here are some ideas for handling multiple offers:
• Seller’s agent can ask buyers’ agents to resubmit their “highest and best offer” and sellers can choose and negotiate the offer they like most.
• Highest price offers are usually favored but it is important to review all the terms (e.g., financing, pre-approval, earnest money, down payment, closing date, etc.).
• Cash offers are usually better than mortgages as there’s no need to obtain a loan commitment or a property appraisal.
• With today’s low rates many buyers will get mortgages even if they have the cash (so mortgages are fine as long as the buyers are solid).
• Watch out for contingencies (e. g., conditions that allow buyers to cancel the contract).
• One contingency is “having a home to sell” – most sellers will shy away from that offer.
• Another is “getting final loan commitment” but that shouldn’t be a problem if the buyers are pre-approved and putting down a substantial down payment.
• Another is “having the home pass the buyer’s inspection (performed by a certified home inspector),” but that shouldn’t be a problem if there are no major repair issues.
• One more is the inclusion of a due diligence clause (which allows the buyer to back out for any reason) and most sellers don’t want this in the contract.
When buyers are paying cash, a proof of funds document should accompany the contract.
With mortgages, appraisals are usually required. A low appraisal might result in a lesser loan amount. Sellers prefer buyers who have the funds and are willing to pay the difference to secure the loan.
Closing dates are important. While some buyers may be able to close in a few weeks, the sellers might need more time and might want a buyer who is flexible on closing and possession.
It is very exciting to get multiple offers. By carefully reviewing all terms of all the offers, sellers can negotiate the best deal and accept the best contract.
Larry Stoller is a broker and Realtor with Real Estate Five of the Lowcountry. Larry@RealEstateFive.com, RealEstateFive.com, SunCityOpenHouses247.com