In a seller’s market, it’s not uncommon to receive multiple offers. And as everyone knows, our Diva Dwellers benefit from higher than average sales prices. (Check out our Diva Difference story about the “Tale of Two Townhouses.”) It’s great to have lots of interested buyers, but how do you know which offer is the right one to take? The best offer may not actually be the one with the highest price.
How the Diva Team Preps on Offer Day
First, we go through all of the offers to ensure that they are legitimate contenders. What does that mean? This means that:
- All of the paperwork is in order
- Everything is properly signed
- The buyers have real financing and/or proof of funds in the event of a cash purchase
For that last one, we call the lenders directly or get verification of funds to close. Next, we input the offers into a spreadsheet so the seller can review the terms in an easy to consume manner.
Team Diva’s Primary Goal for Multiple Offers
Our #1 goal is to get the buyer who is willing to pay the best price possible AND close the transaction as easily and quickly as possible. We have seen multiple offer situations go bad because the “winner” gets cold feet. The seller goes from having multiple buyers to suddenly scrambling for one decent buyer, and this is not a situation we want our sellers in.
That’s why, in addition to considering offer price, we advise the seller to review the offers closely. Choose the buyer that feels most motivated to purchase the home and close the deal with minimal stress and problems. Bottom line: Who is going to pay the most for your home and cause the least amount of issues closing the transaction?
How The Diva Team Rates Multiple Offers:
Here is a more in-depth look at what we consider as we review each offer on your home:
- Financing – How much money are the buyers putting down, who are they pre-approved with for financing, and can they CLOSE on this house based on their offer terms.
- Timelines – A buyer with really long timelines on the inspection, title review, and other items may be either less motivated to close the deal, or have an unseasoned agent as their representative. We prefer to avoid long timelines since they drag out the process unnecessarily.
- Letter From the Buyer – Does the buyer love the house? If yes, then they are probably more likely to work through any situation to close the house. But… the seller must be careful in this situation, because in no way can they use any information that the buyer has given to openly discriminate against them for any reason.
- Offer Price and Escalation Clauses – Although we encourage our buyers to come in strong from the start on an offer during a multiple-offer situation, we understand that some buyers are more cautious. Ultimately, we rarely advise our sellers to discourage the use of an Escalator Addendum during a multiple offer scenario, but there are times when “highest and best” offers might come into play.
How Does the Escalation Clause Work?
The Escalation Addendum is a relatively new addition to our processes. Here is an example of how they work in a nutshell:
- Buyer A offers $921,000, and is willing to do $7,000 more than the next best offer up to $1,014,000.
- Buyer B offer $950,000 and is willing to do $10,000 only up to $1,000,000.
- The winner would be Buyer A, at $1,007,000 ($7,000 more than the next best offer of $1,000,000).
Ultimately, it is the seller who decides to whom they sell their home, as long as they do not violate any fair housing laws in making that decision. This means if you like buyer “Sam” because they have a dog and you love dogs, you can sell your house to “Sam”… even if they had the lower offer than buyer “Sue,” who does not have a dog.
We hope this helps you to be the top seller on your block! Read more about what we send to our buyers before we submit an offer during multiple offer season.
Now that you know how to evaluate multiple offers, get more home seller education!
Every home seller wants multiple offers so they can get top dollar for their home, but it’s important to remember that the most money may not actually represent the best offer. There are many different things to consider, and you want to make sure that a multiple offer scenario doesn’t backfire. Get an experienced agent to help you evaluate the possibilities and choose the best bet, not just the highest mark.
Is it time for you to contact a Diva and get a free personalized market analysis?