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If you know someone who’s sold their home this year, you’ve likely heard a bidding war story or two.
Home sales are zooming along at a record pace. Yet buyers continue to run into roadblocks. There just aren’t enough homes on the market to keep up with demand.
According to a Coldwell Banker study, nearly half of recent home deals came with multiple offers. That leaves sellers with an interesting problem: How do you know which offer is best?
Nearly half of recent home deals came with multiple offers.
California’s seen its share of bidding wars. So we asked Shannon Jones, one of Dave’s real estate Endorsed Local Providers (ELPs) from Los Alamitos, for her expert advice on this topic. Here are four easy ways to make the most of your next home deal.
1. Turn Up the Competitive Heat
Before we dig into how to identify the best offer of the bunch, let’s talk about how to stir up competition in the first place.
When the market’s hot, it can be tempting to crank your asking price up as high as it can go. But Shannon cautions against that strategy: “Choosing the right pricing strategy is still critical for maximizing the interest and the number of offers,” she says.
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Of course, that doesn’t necessarily mean you should aim for the lowest price on the block either. “You want to make sure that your home represents the best value based on its location, condition and price,” Shannon adds.
Ask an agent you trust to pull a comparative market analysis so you can price it right from the get-go. Then work with your agent to get the word out as soon as you list your home. A true pro has the know-how to launch a marketing strategy that brings buyers in numbers.
2. Give Buyers a Deadline
We’ve all heard the saying: Your first offer is always your best. But in a strong seller’s market, that may not be the case.
Take Jen G., for instance. She listed her Nashville home on a Thursday afternoon. By the end of the weekend, 30 people had toured her home, and the offers rolled in.
How did Jen know where to draw the line? Her agent set a deadline. They would accept offers through 5 p.m. Sunday. That not only created a sense of urgency, it also enabled Jen to compare the best offers before picking a winner.
Shannon also uses this approach. When sellers get offers before a big open house, she suggests waiting until after the weekend to respond. “At that time, we can assess what we have in hand, check buyers' qualifications, and then make a recommendation as to how the sellers could counter to maximize their selling price,” she says.
3. Consider the Big Picture
Now let’s talk about the ingredients of a strong offer. Everyone knows price pulls a lot of sway. But Shannon says it shouldn’t be the only deciding factor. Here are a few other aspects to consider.
- Financial strength: You don’t want to take the highest bid only to find out the buyer can’t back it up with cash. That’s why it’s important to look at the bigger financial picture. Has the buyer been preapproved for a mortgage? Are they offering more earnest money or a bigger down payment? Is it an all-cash offer?
- Buyer concessions: It’s easy to get so caught up in what’s in it for you that you overlook buyer requests that may be part of an offer. Study every offer to be sure you understand the give and take that comes with it. For instance, one full-price offer might ask for $3,000 in closing costs, while another has no concessions. Do the math to determine your best bottom line.
- Flexibility: Many folks have no trouble selling a home in this market. The hard part is beating out buyers to your next home. This was one of the factors that swayed Jen’s decision. The winning buyer offered to let Jen’s family stay put for up to two months after closing if needed. That took a lot of stress out of the sale and gave Jen time to find the right place for her family.
4. Beware the Pitfalls
Weighing offers puts you in the seat of power. But be careful not to let it go to your head.
Stringing buyers along to build drama, for example, can backfire if you wait too long to respond. “Some of them will lose interest and withdraw their offers,” Shannon says.
Counter offers are another slippery slope. Think about the number of serious offers you have in hand before upping the ante. Shannon has seen a good quarter-to-half of buyers bow out at this stage of negotiation. “If you only have two offers and you lose the best one, you may wish you'd chosen a different counter-offer strategy,” she says.
Hopefully, you have an experienced agent by your side to help you sidestep pitfalls like these. Team up with a master negotiator who fights for your best interests, and you’re sure to find the most gain with the least amount of pain.