A hot real estate market is excellent news for your listing clients. Most home sellers dream of having multiple offers on their property. However, a bidding war can be fast-paced and dizzying, with the potential for a costly mistake. Guide your sellers through a bidding storm with these tips for success.
Do your market research.
First, research home sales in the local market and develop a thorough competitive market analysis (CMA). Are homes selling within a few days of listing? What are the closing prices? Are sellers getting at or above the asking price?
Start on the right price footing.
Setting the list price for your house is perhaps the most critical step in a competitive seller’s market. Start too high, and it may trigger low-ball offers. Price too low, and you’ll get a quick sale, but with the nagging feeling that your client left money on the table. Multiple offers often occur when the list price is slightly below the average price for a comparable home. At that price point, multiple offers can quickly push bids above the asking price. Armed with your research, present the best price for your client’s home with confidence.
Don’t overlook the basics.
The house must be in good repair, cleaned and staged, and well marketed. There are no guarantees that an MLS listing and a sign in the yard will sell a house for top dollar. Professional photos and a targeted marketing plan increase reach and engagement for the listing.
Choose the best time to go live.
Selecting the optimal time to go live with the listing gives your seller the best chance of attracting multiple offers. The best day to go live with a listing is on Thursday. Why? Because most buyer agents schedule showings on Thursdays or Fridays for the weekend. So if you wait to list on a Saturday morning, some buyers might be fully booked appointments for other properties and may not add your listing to their search.
Kindness goes a long way.
Always be courteous to the agent on the other side of the transaction while keeping your fiduciary responsibility to your client top-of-mind. Make sure not to divulge any confidential information on the motivation for selling to the buyers’ agent. You want to be fair and ethical in your approach to multiple offers. All parties appreciate it if you set a firm time and date for the highest and best offer. Don’t make promises to the buyer’s agent regarding the chance of offer acceptance.
Offers in hand, how to select?
It isn’t as simple as the highest bidder wins. The quality of the buyers themselves is crucial. When selecting among offers, the buyers need to have their money in order: a preapproved loan and a healthy down payment make mortgage processing smoother.
What happens if the home doesn’t appraise well?
In this scenario, the buyer is left with two choices: come up with more money out of pocket or the seller lowering the price. In other words, multiple offers are great, but the sky is not the limit. The lender’s appraisal could bring your seller back down to earth.
Another area to consider: contingencies
In a bidding war, buyers are advised to make their absolute best offers. From the seller’s perspective, that means few, if any, contingencies. Offers contingent on the sale of the buyer’s home may be rejected outright by the seller in a hot market. A buyer paying over the asking price may set some contingencies as his compensation for paying more. So don’t be surprised if they ask your seller to cover some of their closing costs, for appliances to convey with the house, or for a closing date that’s not quite what your client had planned.
When all is said and done, the best offer is the one that balances the best price, minimal contingencies, and the probability of a problem-free closing.