How to Manage Multiple Offers When Selling Your Home
If you are selling your home in a seller's market, you will likely receive several offers on your house. It happens because the number of buyers exceeds the number of available properties. While it is a challenging situation for buyers as they have to compete for the perfect house they have found, you are in a better position. However, don't think that it will be smooth sailing. Unfortunately, having a few offers for your house comes with some disadvantages. For instance, the fallout rate, which jumps significantly for properties with multiple offers. It goes as high as 50%. This is because buyers feel stressed due to the competition and often get cold feet and give up, thinking they would be overpaying for the property.
To increase your chances of a fast and successful sale, we have prepared a guide on how to manage multiple offers when selling your home.
What happens when you get multiple offers when selling your home?
Once you list your home, you may receive several offers. However, you don't have to perceive all the offers as equal and give them all equal consideration. So, if you get more than one offer, you have a few options:
- Accept the most favorable offer for you immediately;
- Contact all interested buyers and counter all offers, giving them a chance to present their highest bid. It ignites the bidding war, which can get you the best price for your home;
- Counter the offer closest to your asking price.
What follows are the advantages and disadvantages of each option.
1. Accept the best offer
If you are in a hurry to sell, you can choose the best offer and reject others.
It is the fastest option and most straightforward option. Closing the deal alone can last anywhere from four to six weeks, so this allows you to proceed to the next steps quickly. It is also a stress-free approach, as there is no bidding war, which does not guarantee you will beat the best first offer anyway.
Choosing the best offer isn't as simple as you may think. What constitutes a good offer goes beyond the highest bid. Firstly, there is always the risk of fallout since you can't know for sure if the buyer will go through with the purchase. So, you have to consider everything. For example, you have to check if any contingencies can weaken the offer, such as when purchasing the home is contingent on selling their current house. Also, if the buyer hasn't been pre-approved, perhaps they won't be able to afford their home.
Finally, you may be able to negotiate a better deal. You never know how much you can get if you don't try.
2. Start the bidding war
When you receive an offer, you don't have to keep it a secret. The National Association of Realtors says that you can inform buyers about the offer you have received, aiming to convince them to make a higher offer.
The power is in your hands, and you have a chance to negotiate the best possible deal.
This is the scenario that can put some buyers off. Many people don't like feeling pressured and may feel like they are being asked to overpay the house. Thus, they may decide to walk away. In some situations, you may lose all your offers. The positive thing is that your real estate agent will know if the buyers in your area are capable of handling the stress of the bidding war. If you are selling in a big, competitive city, and your target market are high-profile business people, this aggressive strategy will probably work for you. In a smaller town and more rural areas, this will likely not fly.
Finally, even if you have multiple offers but all are bad, you are unlikely to start a bidding war.
3. Counter the best offer
If one of the offers clearly stands out, but there are a few contract details to figure out, you can choose to counter it to see if you can get the best terms possible. At the same time, you can keep a few other reasonable offers on standby.
If you decide to take this route, you can get a nearly perfect deal. The buyer you selected can know that you have other good offers, but you are willing to choose them if they agree to meet your terms. And if the negotiations fail, you have a few other interested parties to fall back on.
The only downside of this strategy is that your backup buyers won't wait for you forever. So, the best time to go with this option is when you are almost certain that you can figure everything out with your best pick.
You may be anxious to sell your home and move to Ontario, but don't make a race out of the bidding war. Sure, things often happen fast, and if buyers really want the house, they have to react quickly. However, creating unnecessary tension will only shake interested parties' confidence, and they may walk away. So, to have the best chances to start over somewhere in Ontario quickly and in a relaxed way, remember that, as usual, slow and steady wins the race.
How do you recognize a good offer?
If you want to successfully manage multiple offers when selling your home, the first step is knowing how to recognize a good offer. So, if your potential buyer ticks all of the following, you can be pretty confident you have got a good one:
- They have been pre-approved for a mortgage. It means the buyer can afford to buy your house and can do so almost immediately.
- They waive their right to a home inspection and want to buy the house as-is.
- There are no contingencies, and they are willing to close the deal on your timetable. For example, if you want to wait until the end of the school year to vacate the house.
Evidently, if you have to manage multiple offers when selling your home, you are in an advantageous position. Still, make sure you play your cards right. Wrong moves and aggressive strategies can cost you the offers and drag the sale for way longer than necessary.