How To Attract Multiple Offers In Any Market – Part 3
You Have Multiple Offers, Now What?
In parts 1 and 2 I discussed how to price your home to attract the largest amount of buyers possible and get multiple offers from those buyers who fall in love with your home.
What do to with those multiple offers once you get them can be a bit of a mystery however.
This is where experience in selling real estate helps to get the “best and final” price from your selection of multiple offers.
Do Not Make This Mistake!
Many times, the inexperienced or lazy Realtor will present multiple offers to a seller and simply say “here is what we have and this is the offer that nets you the most amount from the sale. What do you think?” (insert eye roll here)
This is where sellers lose money.
Just because multiple offers are received doesn’t mean you stop negotiating in fact, you’re only half way through the negotiation process.
Note: Please understand that just accepting the highest offer is completely acceptable if that’s the decision of the seller. Some folks just want to get it done and perceive if they don’t they risk losing the highest offer. Just understand that decision most always leaves money on the table.
A Valuable Lesson From Big Banks
During the downturn, there were many, many foreclosures in the Sacramento region as there were in other parts of the country. In an effort to get the most amount of from the sale of each foreclosure, the big banks would have their agents send out an email to all buyers agents who had submitted offers for their clients with the following message:
“Multiple offers received. Please submit your clients highest and best offer.”
I grew to hate the term “highest and best”. What it meant was that you needed to send them your clients best offer without any guidance whatsoever as to what that price might be.
There were no counter offers. They simply said, send us your best offer and we’ll decide who we’ll work with from there.
For buyers during this time it was a nightmare. That said, this is an excellent strategy to find who the serious buyers are. There is the very valuable lesson that came with the experience of selling homes offered by the banks.
The Secret To Getting THE Highest Possible Price From The Sale of Your Home
INSIDER KNOWLEDGE ALERT! Once you have multiple offers you have to make a decision on which offers to work with. You can decide to just accept the highest offer (mistake mentioned above) or you can go back to the top two offers and have your agent email them the following message:
“Multiple offers received. Please submit your best and final offer.”
This is the secret to netting the highest amount from the sale of your home. It works.
The buyer who comes back with the best offer is the winner. This offer is the best the market will bear for the sale AND still leaves the seller in a position to counter out terms that are not customary or unfavorable.
This year alone, I made one client $21,000 over the highest offer, another client netted $18,000 over the highest offer. This week, I netted my client $15,000 over list price even while the market is slowing down.
How About $21,000 Over the Best Offer, $51,000 OVER Appraised Value?
Here is an example of how this strategy works.
In May, I listed a home in Roseville. The house was well maintained, on a court, the interior was very nicely done, had a pool and a high end custom security system.
I had been talking with the seller for about 6 months about the value of his home and what we thought we could get. He was seeing about $340K and I was seeing a little more than that. As we got around the beginning of the year and the market started heating up, I told him that frankly, I didn’t know what we could get for the house but that I had an idea where to start.
There was a home just around the corner from his home that was in pending sale for $399K without a pool, slightly smaller but nice.
I told them that I felt $399K was where we wanted to start to get attention. The comparable sale had sold in 2 or 3 days at that price and I felt that, with a pool, at this price, his home would get a lot of attention. My sellers agreed and our initial listing price was $399K.
It got a lot of attention at that price! We had 7 offers within 4 or 5 days.
When speaking to my clients, we discussed what price would be nice to end up with and then the “pie in the sky” unrealistic number. We laughed and joked about that one but we all assumed it would finish around $425K.
The best two offers were one cash offer at $425K and a financed offer at $430K. Because cash is always a better offer than a financed offer, closes more quickly with less hassles typically, the sellers and I considered these offers equal. I sent an email to both agents representing those offers for their buyers best and final offer.
The cash offer said that their initial offer was their best and final. The financed offer came back with an addendum to the original agreement and came up $21,000 from their original offer of $430K!
This number, $451,000, represented $1,000 higher than the “unrealistic, pie in the sky number” my sellers and I had discussed!
This example is extreme and while similar results are possible it is unlikely that most sellers will get $51,000 more than list price and for that matter $51,000 over appraised value.
When the house was appraised by the buyers lender, it appraised for $400,000. While this was a low appraisal and clearly not accurate just based on the one comparable sale we had, it meant that the buyer had to come in with $51,000 of their own money to make the sale happen.
Keeping a buyer in the transaction when this happens takes skill but we I got that done too and we closed on time. How did we keep the buyer from cancelling? That will be a topic for another post as this one is already too long! Stay Tuned!
Thanks for visiting!
Buying or selling a home in Rocklin? If so, I’d like to help you. Please call or text me directly at 916-532-7653 or click here, for my contact page.
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