Multiple offers on homes are back!!!
In the past several months we have seen an increase in multiple offers and I wondered if it was just in our area or in other markets around our state. I just read an interesting article in the May 2014 issue of Florida Realtors magazine that confirmed…we are not alone!
In general, our market has been stable for well over a year, but we have experienced a Seller’s market (less than 6 months of inventory) in a few specific areas such as Niceville and Fort Walton Beach. When that happens we then begin to see multiple offers on properties as it reflects the theory of supply and demand. When the supply is diminished and the demand for quality homes stays the same or increases then buyers will often find themselves in a bidding war.
For a seller that may sound great but only if the seller is able to decipher which offer is the best for that particular seller. Although the purchase price is a major player it is not necessarily the driving factor. Terms are also important to consider.
They say “Cash is King” but is it?
Is it better to accept a cash offer at a lower price versus a higher offer contingent upon financing? With financing there is a chance that once the loan file gets to the underwriting it could be declined. Then you have lost a few weeks of marketing time and possibly another buyer while waiting for the final loan approval.
Let’s take a look at “Seller Sam”.
Seller Sam has four offers on his home. How does he decide which one to counter or accept? What if they are all so close in price and terms?
Many times the seller will allow their listing agent to disclose there are multiple offers and to ask the buyers to bring their “highest and best” offer by a certain time. The listing agent will then collect those offers and then explain the terms and conditions and often prepare a net sheet.
The net sheet will give the seller an estimate of the closing costs so the seller can evaluate the bottom line along with the terms. Then the seller can see each of the offers side by side and evaluate which one best fits their needs.
Multiple Offers Can Be Intimidating
Today’s buyer may find themselves in a multiple offer situation and feel intimidated. Some buyers may even decide they do not want to participate in a “bidding war” and chose to walk away.
For those that decide to stay the course, they too may need some guidance on the best strategy and this is where the buyer’s agent plays a key role.
The buyer’s agent now has to provide the buyer with all the necessary information about the property including comps to assist in determining an offer price. They should be ready to discuss options in terms and conditions. In most cases the offer with the least amount of contingencies is considered the most favored, but again it comes down to what the seller deems best for them.
The buyer must be able to determine what is the highest price they are willing to pay for a property and be comfortable should that offer price be accepted. It is the buyer’s agent’s role to provide all the necessary information to the buyer so they may determine the best decision for them.
At the end of the day we all want the buyer to feel happy and comfortable with the offer should it be accepted.
Your Agent’s Role
As you can see a real estate agent’s role is extremely important in assisting both sellers and buyers in multiple offers and open communication is key.
Your relationship with your agent must be one of trust and clear communication on both sides. Your real estate professional is there to assist you and give you the tools to make the best decision for you!!
Tap into their knowledge and never be afraid to ask questions or share your concerns….we are here to support you in any way we can.