How to Drum up Multiple Offers for Your Listing
In a hot real estate market there is always a really good chance that home buyers will end up competing to purchase your home. When inventory is scarce and prices are being driven up, you need to be prepared for receiving multiple offers on your listing. When you are offering to sell a top quality home, coupled with expert marketing, buyers may be lining up and offering you top dollar for your property. You need to know how to handle multiple offers to navigate this luxury that many sellers hope for.
Generating multiple offers is not an exact science and nobody is going to be able to guarantee that it is actually going to happen. But, with the right advice from your real estate agent and proper preparation, you can stack the cards in your favour to generate a bidding war for your listing.
While receiving multiple offers for a listing is very exciting for the sellers, it is rather frustrating for buyers to deal with. Understandably buyers are extremely emotional when they find out that they are competing for a home and can easily overreact to things while the negotiation is taking place. Sellers and their real estate agents need to be extra cautious with how they communicate in a multiple-offer situation to avoid making costly mistakes or perhaps completely miss out on selling the property.
Here are a few tips to help you out land multiple offers for your listing and then how to handle them like a pro.
Steps to Generating Multiple Offers
- Analyze your local real estate market.
- Visit open houses before listing your home.
- Price your home competitively.
- Make your home look like a showhome.
- Prepare in advance.
- Create maximum exposure with professional marketing.
- Select an experienced real estate agent.
Study the Local Real Estate Market
Your odds of being able to generate a bidding war is greatly going to depend on whether you are in a seller's or a buyer's market. In a seller's market there are a few homes to choose from for home buyers, and the exact opposite is true when we are experiencing a buyer's market condition. Be sure to have your local real estate agent to explain to you in great detail of what the local real estate market is like.
It can also be extremely educational to visit open houses and view other listings in your neighborhood before listing your own house. Keep in mind that buyers will be visiting those homes as well and they are going to be comparing them to yours. So why not act like a buyer for a few day and gain perspective on your competition? Understanding what condition those other homes are in will give you a leg up on your competition and guide you to price your home to sell.
Price Your Home Accurately
Your real estate agent's number one goal when determining a price should be to educate you about the local real estate prices, the number of days it takes to sell a home and other statistics that may influence the probability of selling. Take your time to clearly understand what comparable homes have been selling for in the area. Once you have analyzed the market, then you can benchmark your list price on the other sales.
In a typical real estate market, homes are selling for within 2%-3% of their asking price. Which means that sellers purposely overprice their listing by that much. If you goal is to to intentionally create a multiple-offer situation, then having an attractive price is very important in any market condition. Sometimes all it takes is to price the home a few percentages below what everyone is listed at and it may be perceived as a "steal of a deal" by multiple buyers.
There is no reason to be afraid of "giving your home away" for less than what it's worth in case a bidding war doesn't work out. Remember, those other listings are most likely prepared to sell it for the same price as what you have advertised at. Even if a multiple-offer situation would not work out, it is most likely that it's your home that is going to receive an offer before anyone else does. When working with an experienced real estate agent, they will be able to negotiate favorable terms and price for you.
Prepare Your Listing Well in Advance
Listing a home takes a considerable amount of preparation for both the homeowner and real estate agent. There could be many things around the house which needs to be tidied up, like painting, cleaning, organizing and most commonly staging a home will contribute the most to a successful sale.
It could take days, sometimes weeks to property plan out and execute a quality marketing plan. A well seasoned real estate marketing team is going create some excitement in the market place even before the listing hits the MLS® database. Professional videos can be created along with fly over images which are very popular these days. 3D virtual tours are also taking off and it's especially popular where there is an influx of out of town buyers. Generating lots of exposure of your home is going to be a crucial element to build-up excitement among buyers.
What is the Best Way to Handle Multiple Offers?
- Decide when you are going to present the offer.
- Bundle showings to create fierce competition for buyers.
- Avoid dealing with an unapproved buyer.
- Decide if you want to disclose the other offer (depending on local rules).
- Secure one offer before telling off the other.
Plan in Advance to Present Offers
Now that you have priced your home to be competitive in your market, an abundance of showing requests may start happening from day one. Most of the buyers will flock to your doors in the very few days of going live with the listing. Serious buyers are very motivated to jump on a great opportunity as their fear gauge is really high because they are concerned about missing out on buying a home that is priced realistically. While most serious buyers will come as soon as they can to view the house, some may not be able to come for a few days as their schedules may not allow it for them.
Because there could be others interested in viewing your home, it is recommended to allow a couple of days for buyers to make their way through your home before looking at any offers. An experienced seller's agent will advise the buyer's agents that offers will be presented in 2-3 days if they were to indicate any interest. It's important to keep in mind that the success of this plan will hinge on the amount of expressed interest. In case the number of showings is quite minimal to begin with, then it could be detrimental to defer an incoming offer. Be sure to seek your real estate agent's advice and discuss all options on how to handle offers on your home.
Mistakes to Avoid When Negotiating Multiple offers
There are plenty of pitfalls to watch out for even when all the stars seem to be lining up to have the house sold to one of the multiples buyers. But if you aren't careful and educated about the following potential pitfalls, then chances are decent that the buyer changes their mind and perhaps walks away from the table.
This may vary depending on your local real estate rules. But for the most part you want to be mindful of whether you should disclose the existence of an other offer. Sometimes in a buyer's market it may spook the other party and they could very well revoke their offer and decide not to compete at all. So make sure to have this conversation with your real estate agent and discuss what options you have and the moves you should take in case you are concerned about a buyer changing their mind.
Avoid Dealing With an Unqualified Buyer
You will likely want to avoid at all cost signing off on an offer where the buyer isn't going to qualify for a mortgage. A well positioned buyer should do their best to prove their case of already being pre-approved for a mortgage to win multiple offer situations. It is not uncommon to request proof of mortgage approval from a buyer while reviewing their offers.
Just because someone has offered you the highest purchase price, it doesn’t mean that they are going to be able to get a thumbs up at the mortgage broker’s office. So make sure that you are confident in the buyer’s ability to secure financing.
Rejecting & Accepting Offers
A common mistake that rookies make is letting the other party know that they have accepted the other offer even before signatures have been looked after. A cardinal rule when dealing with real estate is that unless it’s in writing it doesn't exist. Be sure to set aside the less favourable offer until you are able to confirm that the other offer is 100% finalized.
It's not uncommon for homeowners to find themselves in a multiple-offer situation if they hire the right real estate agent and prepare their home to appear attractive to buyers. The above tips will help you to provoke a multiple-offer situation and reminds you of how to handle them when you get blessed with the opportunity.