The housing market is on the rebound, home prices are rising and, for the first time in nearly a decade, two or more offers at the same time is a common occurrence. It’s a good problem to have if you are a seller, but there is one thing to think about… Now that you started a bidding war, how do you chose the best offer??
While money is a major consideration, real estate agents are counseling their clients to look at a variety of factors while entertaining multiple offers.
Contingencies, closing dates, and all-cash offers : Try looking for the most appealing closing date and whether the bidders are willing to waive contingencies such as an inspection, attorney review and mortgage approval. By waiving their contingencies, buyers have fewer “outs” and a deal is more likely to sail through the process. Sellers should also know how much earnest money each bidder is offering. Earnest money isn’t a down payment but it is money held by the real agent that provides a guard against a buyer walking away from the deal at the last minute. Also, while you might be dismissing a higher offer, cash is still king. Buyers should also examine a bidder’s financing – how stable it is and where it is coming from.
All of the offers are so similar : If there are two or more offers that are roughly equivalent, a seller can respond to more than one buyer. But a sell should be transparent about the time frame and ask for what’s commonly called a “best and highest” offer. It can be tempting to keep that bidding war going, but a war can be a turn off for potential buyers. Giving everyone a deadline narrows the focus and gives everyone a chance the chance to strengthen their offer. If you give everyone an equal playing field, that’s the best practice and the ethical way of doing things.
