Seller Considerations for Competing Offers

1. Buyer’s Financial Strength: Sellers assess the buyer’s overall financial situation, including their ability to secure financing, as this indicates stability and a higher likelihood of closing the deal.
2. Offer Price: The most significant factor; sellers compare offer prices to determine which is most attractive.
3. Contingencies: Offers with fewer contingencies (such as financing, inspection, or appraisal) are generally more appealing, as they reduce potential complications.
4. Closing Timeline: Sellers may prefer offers that align with their desired closing date, so flexibility can be advantageous.
5. Personal Touch: A personal letter from the buyer expressing their connection to the home can make a positive impression, though some agents/sellers may not accept personal letters to ensure fairness to those who did not know they could submit a letter.
6. Flexibility on Terms: Buyers willing to accommodate the seller’s needs, such as rent-back agreements or specific closing dates, may stand out.

By understanding these factors, buyers can work with their agents to learn the seller’s needs and craft offers that are more appealing.

Struggling to Find a Home and Get Your Offer Accepted: In the home-buying process, achieving about 70% of your “Dream Home” checklist is often considered a success. Typically, buyers spend around 11 weeks searching for their ideal home in a normal market. However, in a seller’s market where available homes are limited, the search can become more challenging.

Reassessing Your Home Search Criteria: If you’re having difficulty finding exactly what you want, it may be helpful to reassess your needs and take a realistic look at your budget. If you find yourself constrained by strict criteria, consider expanding your search. You might discover an equally wonderful home outside your original perimeters.

Offer Strategies for Primary Residences

In a seller’s market, multiple offers on the same home are common. Sellers can accept an offer at any time, even before a date to review all offers is announced. If your offer is fair and competitive, you can expect to receive a Seller Multiple Counter Offer.

In a multiple offer situation, it’s crucial to make an offer you are comfortable with. If another buyer secures the home for $5,000 more, you can walk away knowing you did your best without regret.

Including inspection, loan, and appraisal contingencies in your offer will protect your interests. In a seller’s market, you may consider removing one or more of these contingencies. I will explain what releasing each contingency means and how it affects your ability to receive a full refund of your deposit within the contingency period if the property’s condition is more than you are comfortable with.

In certain cases, you might consider adding an escalation clause that offers a specified amount over any bona fide offer. The amount should be in line with the market and significant enough to make a difference. The listing agent must provide proof of the higher offer if your offer is accepted. However, many agents are unfamiliar with escalation clauses, and sellers often prefer a specific dollar amount in the offer. If you are not comfortable with the final price, you can simply rescind your offer.

Low Offers: Understanding Seller Responses and Negotiation Strategies

Savvy property owners, often advised by their listing agents, strategically list their properties at or slightly below fair market value. This approach tends to attract a higher number of buyers and elicit offers exceeding the asking price.

Submitting a low offer can be counterproductive, as it may signal that you are looking for a deal rather than being a serious buyer. This could potentially insult the seller and lead to a lack of response. When sellers do reply to low offers, it often results in a high counter offer. Statistics indicate that when counter offers go back and forth three times, the deal usually fizzles out.

Understanding Seller’s Bottom Line and Competing Offers

Your agent can inquire about the seller’s bottom line, but it’s essential to understand that the listing agent is obligated to prioritize the seller’s interests and secure the best possible price. They are not permitted to disclose the seller’s lowest acceptable price to other agents or multiple buyers due to contractual obligations. While there are methods to gauge where offers might stand, it’s important to remain aware that a higher offer could emerge later, particularly during multiple offer negotiations. Being available to your agent during these negotiations is crucial.

For Sale by Owner (FSBO) Homes: This type of sale requires caution. FSBO sellers often overvalue their properties and may be hesitant to negotiate terms. Assessing your ability to navigate purchase agreements, disclosures, inspections, repairs, and responsibilities such as property liens and unpaid taxes is crucial in these situations.

A Seller’s Market: This is characterized by limited inventory, where multiple offer situations are common, especially for homes that meet modern living standards. Sellers, guided by their agents, review and counter the most favorable offers. Therefore, submitting a lowball offer may result in no response, as sellers prioritize serious and competitive offers, emphasizing that this is ultimately a business decision.