In any market, a property can receive multiple offers. We deal with this in our office on a near-daily basis. What that typically means is that folks may like a certain property and that property receives several different offers.
When you have a multiple offer situation, there are several different ways to handle it. The first thing to remember is that it’s not the agent’s prerogative as to how to handle the multiple offer, and many agents are confused about that. Our real estate commission rules and regulations state that you must follow the instructions of the seller. My job as a real estate agent is to tell the seller what the options are and allow them to choose.
If the property gets multiple offers, the seller has the option to look at just the first offer that comes in, or look at all offers that come in. Then you have an option as to how exactly to deal with those.
Sometimes a seller will choose to look at all the offers, which is my recommendation as a real estate agent, and then we can issue what is considered in the industry to be a “highest and best.” This is a notice to all the agents involved that they can have the buyers issue a different offer on the property. They can change the price, the terms, or even the closing date—anything to make that offer more desirable to the seller.
When we have a deadline for these offers to come in and they are received, I will then present all the updated offers to the seller for consideration.
“The highest offer isn’t necessarily the best offer.”
What makes it the best offer for the seller? It really depends on what the seller considers is the best offer for their property. Sometimes it depends on the closing date, especially if the seller is on a deadline and needs to close on or before a certain date. Other times, it’s all about the purchase price.
The highest offer isn’t necessarily the best offer—it’s more about the bottom line and how much the seller can net for their property. It also needs to fall within the range of value that I have determined for the property. A price higher than the appraised value of the home can cause problems.
Is a cash offer better than a financed offer? The cash offer is better if you have a big earnest money check. The buyer can take a walk through the property on the day of closing and drop the deal. If the check is small, then they don’t lose a lot of money by walking away.
How can you as a qualified professional help the seller find the right offer? Before you even take a listing, you should know what the seller needs. Those needs should be realistic.They need a certain bottom line, closing date, and make sure that they have a qualified buyer. Knowing this information will help you find the right offer for your client.
If you have any other questions about this topic or you’re looking to buy or sell a home, give me a call. I’d be happy to help.