Selling your home is like riding a roller coaster. You start with hesitant anticipation as you begin the process of getting your home ready to list. Then the sign goes up and your house is listed on the MLS. That’s when things start to slow down. Days pass, perhaps weeks. There are viewings, but no offers. Things start to feel bumpy and you start to feel out of control. That’s when the offer — or better still more than one offer — starts to come in. Then the roller coaster starts all over again.
Here are some essential strategies that will help you deal with offers on your home and keep you in the driver’s seat.
Never Forget to Counter
In slower markets, when buyers have the upper-hand, some potential shoppers will try and test the waters by offering low-ball bids. This is not the time to let emotions rule. Rather than be insulted, counter the offer. Sure, you may have to come down in price, but the buyer will have to come up, as well.
Be mindful, however, and do your due diligence. Unethical agents will use a staggered bids strategy — a less-than-honest sales tactic to get a seller to reduce their price and agree to a sale.
It works after your home has been on the market and you’ve had a few showings. That’s when your Realtor will call to tell you about a potential buyer but with an explanation that the offer is really, really low. Most sellers will reject the offer without hesitation and most don’t even bother to counter the offer. Unethical Realtors expect you to do this.
A few days later, your Realtor calls again with another potential buyer, but this time the offer price isn’t as low, but it’s still significantly less than your asking price. This time you take a little longer to reject it.
Wait a few more days and your Realtor will phone one last time. Yet another has come in. Better still, it’s a formal bid with a signed Purchase and Sale Agreement. Even though it’s still below your list price, it doesn’t sting because you were already psychologically massaged into lowering your expectations.
There’s nothing inherently wrong with this practice as long as the first two bids were real. But unscrupulous Realtors have been known to fabricate staggered bids to convince you that a bad offer is actually a good deal.
How do you avoid this from happening? Always ask to see an offer in writing. If there is no offer in writing — some buyers won’t spend an hour or two filling out formal paperwork if there’s a good chance their offer will be rejected — then ask your agent for more details. Ask how fast a closing the buyer wants? What conditions will the buyer add to the offer? And what fixtures or appliances does the buyer want as part of the deal. The actual details aren’t important. What is important is whether or not the details sound realistic enough that a buyer really is attached to these verbal offers.
Of course, if it all pans out and numerous buyers end up offering you less than your asking price, you may have to swallow that bitter pill and accept that market values your home less than you do, at this point in time.
Discuss All Offers
If you are a first-time home seller, then make sure you have a trusted friend, family member, lawyer or real estate agent with you to discuss the details of every offer. Talking to someone you trust or working with a professional helps you to remove the emotion and focus on the important aspects of each offer.
If you’re working with an agent, you will also probably get professional advice on the next steps to take.
Take Charge of Conditional Offers
As sales activity slows and more real estate markets end up in a buyer’s market, sellers will need to become more accustomed to conditions in purchase offers.
In real estate there are two types of offers:
- A clean (or firm) offer is a sales offer from a buyer that is free from any conditions. Once the seller accepts a clean offer, the deal is done.
- A conditional offer is an offer to purchase the property that includes at least one condition that must be satisfied before the deal is completed.
Common conditions for buyers are the inclusion of a home inspection, a condition upon financing (which means the buyer has a certain period of time to finalize and secure financing to complete the sale), and the condition “upon sale of an existing home.” Keep in mind, however, a buyer can include a condition for almost anything.
From a seller’s perspective, a “firm offer” is preferred. But in a slower market buyer’s are less anxious and, as a result, don’t feel the pressure to give up on conditions. That’s when conditions are added back into purchase offers.
In order for the deal to move forward, the conditions from the buyers need to be met.
From a seller’s perspective, this means weighing in the likelihood of each offer being met. If there is a chance that an offer can’t or won’t be met, you may want to reconsider whether this is the right buyer, or the right deal, for you. Another option is to reject the offer and counter with an agreement that strikes one of more of the buyer’s conditions. Keep in mind, a buyer may choose to walk away at this point.
Dealing With Multiple Bids
This scenario is where things get interesting. You will be getting multiple bids for your home if it is priced aggressively, located in a prime area, or you and your agent marketed the property in a way that it initiated a bidding war.
The best way of dealing with multiple bids is put in a process to deal with multiple offers as soon as the home is listed for sale. That means including a deadline for offers — typically a week or two after the home was listed and a few days up to a week after the first open house.
Once more than one bid is made on your property, sit down with each offer and review the terms one-by-one. Examine the price offered, the conditions asked and the closing dates requested. Each component is negotiable, just keep in mind you can typically only negotiate with one buyer at a time.
The trick is to choose the highest bid with the closest possible offer to a “firm deal.” In a real-life situation, this could mean declining one buyer’s offer, even though that person offered the most money because it includes a condition that isn’t favourable to you or runs the risk of killing the deal.
Review the Terms Carefully
While everyone focuses on price, there are actually other aspects of the bid contract that you need to focus on.
For instance, the buyer’s preferred closing date. If the buyer really wants a specific date, that means they’ll need to be flexible elsewhere, such as price.
Also, the buyer isn’t the only one who can add conditions to the offer. If a buyer adds a financing condition, then you can counter-offer and add in a request for pre-approval financing letters.
You can also introduce new terms. For instance, you can offer to pay or ask the buyer to pay closing costs or other transactional costs. Just keep in mind that a win-win firm offer is when both you and the buyer walk away feeling good about the deal.
Don’t Let Your Emotions Drive Decisions
Finally, you need to understand that there will be different kinds of buyers out there. Some will try to low-ball you while others will try to lure you with cash-only offers.
Selling your home is an intense and emotional experience for most homeowners and that intensity requires you to keep your cool in difficult situations. You are the owner of that property and you deserve to get the most out of that deal. But if you don’t like the price or terms of an offer, don’t ignore it. Look at each offer with an open mind and counter whenever possible. Negotiation is part of the process and, as experienced Realtors will tell you, a deal isn’t dead if you’re still talking. So stay calm and counter!
To sum things up, selling your home is not easy and it really helps to have someone experienced by your side. In your mind, set a minimum price that you require in order to agree upon a sale. Just remember the old saying about a bird in hand being worth more than two in the bush. It’s always wise to deal with the offer, or offers, on the table, then the hoped-for offer down the road.
View all posts in this series
- What is Bridge Financing?
- 5 Tips to Stage Your Home Like a Pro
- 7 Essential Steps to Selling Your Home Successfully
- Selling a Home in a Buyer’s Market
- Best Time to List Your Home For Sale
- What comes first: Buying a new home? Or selling your current home?
- Get Your Home Ready to Sell
- 5 Easy Ways to Help Sell Your Home Fast
- 5 Smart Tips to Sell Your Home for Top Dollar
- How to Price Your Home, Accurately
- 4 Strategies to Start a Bidding War
- Selling Your Own Home vs Using a Realtor?
- How Find the Right Real Estate Agent
- 3 Strategies for Saving on Realtor Commissions
- Best Strategy for Selling a Home
- Dealing with Offers on Your Home
- What Men and Women Want in a Home
- Home Updates that Add Value
- What to Expect from a Real Estate Closing: A Seller’s Perspective