Handle your plethora of offers with confidence!
The 2022 market has been a wild one – we’re in a strong seller’s market with some homes getting 50+ offers at a time! All these offers can become overwhelming for sellers. That’s why I’ve decided to put together some of my best tips for handling multiple offers. Check them out below, and remember that having a reputable real estate agent by your side during these times is essential for navigating this tricky territory.
Don’t Automatically Accept the Highest Offer
The best advice I can give to sellers when they are presented with multiple offers is to not automatically accept the highest offer. Yes, it’s exciting to see an incredible offer, but you have to think logically in those times and look everything over in detail.
Buyers can write escalation clauses into their offer that both parties need to agree on. An escalation clause means a buyer agrees to increase their offer amount over the highest bidder, setting a cap price in their bid. Yes, this can be nice, but you have to make sure it’s a reasonable amount. Any offer that is too high will most likely get a low appraisal, causing the buyer’s lender to give less than they actually offered. This essentially means they won’t be paying as much as they originally promised. I can’t stress enough how important it is that you know your buyers can truly afford your offer – you don’t want any surprises down the road.
There could also be contingencies in an offer. Contingencies are the ‘but’ of the offer, meaning the buyer will follow through with their offer on the condition of something like a home inspection, financing, etc. Pretty much someone can offer a high amount, but at what cost?
A popular one is an appraisal contingency, which means the buyer makes their offer but will only pay for it upon the lender’s appraisal. Accepting this type of offer could cost you another offer without this type of contingency – so as I said before, always look into your highest offers in detail because there could be some contingencies.
Avoid ‘Bully Offers’
In today’s competitive market, you’re sure to get a bully offer as a seller. A bully offer, also known as a pre-emptive offer, is when a buyer puts an offer on a property before the seller states they are looking at offers. This happens if you list your home on MLS but wait to look and accept any offers as a strategy to get more views on their property.
Bully offers are high-pressure sales tactics for buyers, so they know the seller will look at their offer. The problem with accepting these types of offers is you’ll never know how much you really could have sold your property for, on what terms, and to whom – just think, it could have been a sweet young family that takes great care of your old property. Bully offers can make you wonder and feel regret for not seeing the offers that could have been.
Bully offers are also not that ethical – you as a seller made it clear that you’re waiting to view offers and they didn’t respect that decision. All while other potential buyers patiently waited and could have made an offer that blew the bully offer out of the water.
At the end of the day, do what’s best for you. Bully offers can, unfortunately, make your selling process difficult as most are unsure what to do in those situations, but just remember that a qualified agent can help you through all these tough decisions – you’re not in this alone!
Understand that Down Payments Matter
Like I said before, high offers can look great on the outside, but you must look at the offer as a whole. Accepting an offer at $550,000 when you listed it for $500,00 may seem fantastic on the surface, but what if the buyer only has a 5 per cent down payment on the offer with no additional funds for a higher down payment. Then, if the appraisal comes in low, the buyer will not have the funds.
It’ll always be a better choice to choose a buyer who has enough money down to satisfy their lender in case the appraisal comes in low. This way you know the buyer will have enough money to pay the difference between the appraisal and sale price. It’s a good idea to ask buyers to state they will pay the difference in their offer in case the appraisal comes in low. This way you’re in the clear and know you have the right buyer.
Lean Towards Cash Offers if Presented
If you want to avoid appraisals altogether, a cash offer might be your best bet. Cash offers may not be the highest offers, but they will save you the waiting process for buyers to get approved and the sale can close much faster. Cash offers are usually appealing to sellers for their convenience, where there is no loan process. I’m not saying cash offers come along often, but when they do – they’re definitely something to consider!
Say Yes to Pre-Approved and No to Pre-Qualified
Once you start narrowing down your offers and looking into the ones you’re truly considering, always make sure your buyers are pre-approved, not pre-qualified. There is a huge difference between these two terms and they are not the same thing.
Pre-approved means they have 100% been approved to take out a mortgage loan, whereas pre-qualified essential means they haven’t been approved yet. If pre-qualified is written on any of your offers, either tell the buyer to get pre-approved or go with your other offers because, legally, pre-qualified is not an acceptable mortgage approval and essentially means nothing when written down.
Overall, and like I’ve been saying throughout this entire article, make sure you look through all your offers carefully and have an experienced real estate agent by your side to guide you through the selling process and dealing with multiple offers. It’s always best to have someone double-check everything and help you make the best decision possible for you!
Call Zoie Conforti Today!
If you’re looking for an experienced realtor in the GTA area who knows the ins and outs of the current seller’s market, then call me today at 647.293.8773, and let’s achieve your real estate goals!
Real estate is in my blood! My entire life, I have been exposed to the intricacies and complexities of the real estate spectrum from resale and land development to pre-construction and closing. I not only can make your homeownership dreams come true, but I have the experience to get your home on the market and sold in no time!