Getting multiple offers on a property is the dream of every home seller. Generating real estate bidding wars means that there is a high chance of selling your house at a good profit. However, the question is how do you handle all of these offers to ensure you get the most for your home when selling a house. A real estate agent, of course, would be able to assist you in both getting the offers and dealing with them. Or if you are planning to sell as “For Sale by Owner (FSBO),” you’ll need to know how to deal with this situation.
Related: For Sale By Owner: A Guide to Selling Your Home
But first! You may have landed on this blog, not because you actually have multiple offers, but because you are just wondering what to do if the situation arises. Well, in that case, you might be curious how a seller can end up in such a fortunate situation. Here is how you, too, can create a bidding war on a house:
- Sell the home at a lower property value
- Sell your house during a hot seller’s market (the best time to sell a house)
- Create a great real estate listing on multiple paid and free platforms
- Improve the home for sale before home staging
- Host open houses for brokers and potential buyers
Learn more by reading How to Get Multiple Offers on a House.
So, what happens when there are multiple offers on a house? Real estate bidding wars will get very intense and purchase offers on your home will go higher and higher. You should, therefore, know how to handle multiple offers on a house. As a property owner, here are some factors to consider when selling your home:
1. Consider the actual value of your home
When property buyers make a very high offer, ask yourself how the offer compares with the actual home value. The higher you price the property, the more difficult it might be to secure buyer funding from the lender.
Whenever a buyer takes a mortgage to purchase a house, lenders usually ask for an appraisal to ascertain the value of the property before releasing funding. Therefore, it can turn out to be an anti-climax for the property seller and property buyer if the appraisal reveals a lower selling price. If the loan application is successful, the buyer will still have to raise the difference between the offer and the loan amount. This could further complicate the real estate negotiation process for the home.
Related: Determine Property Value Following These 3 Different Methods
2. Don’t just look at the offer
The goal of every real estate investor and homeowner is to sell to the buyer that offers the highest asking price. However, your decision to sell should not just be based on the highest bidder. The person making a high offer might not be eligible for a loan large enough to purchase the property at the agreed price. This could bring problems at the closing table. Before doing anything else, find out if the buyer is pre-approved for the home loan.
Therefore, besides considering the highest offer, take time to review the terms and conditions of the contract with a real estate agent. For example, consider how much money the buyer should pay as a down payment before taking a loan.
3. Is the buyer paying in cash?
When it comes to how to handle multiple offers on a house, consider if the buyer is paying in cash or using a loan. If you find a buyer that is ready to buy the house in cash, go for it. A cash offer means that you can bypass all the steps involved when the transaction involves a loan. You don’t have to be concerned about the appraisal process and the sale can close much quicker. Some sellers even prefer taking a lower offer in cash than a higher offer which requires mortgage financing. As they say ‘cash is king’.
4. Look keenly at contingencies
A good real estate contract should have as few contingencies as possible. If you can find one with zero contingencies, the better. Some buyers might want to add conditions in their offer which will complicate the real estate deal. For example, they might require your house to pass an inspection or your property to be appraised for a specific amount. Others might even include a stipulation that their current house must sell first before they purchase your property. Such contingencies are a total waste of time when trying to sell your home.
Hire a real estate agent and ask them to carry out due diligence to find out what contingencies the seller has included in the contract. The terms in the final contract should also appear in the buyer’s pre-approval letter. It could read something like: ‘Buyer selling their house first is not subject to the sale of any real estate’.
5. Review closing periods
Most sellers want to get home sales done as fast as possible. As a property owner, you need to know how to sell your house fast. However, you might find some buyers that want to drag the deal out for months. If you are not in a rush and have time on your hands, it might pay off to wait for the highest offer. However, when there are multiple offers, time is of the essence for both the seller and the buyer. Look for a buyer that will give you the best offer in the shortest time possible.
6. Consider buyer extras
In an attempt to stand out from other bidders, some buyers might volunteer to pay a percentage of your closing costs. Others might make a bid with an escalation clause so as to outbid other buyers by a specific amount. If you want to save some money, consider offers that come with such additional terms.
Related: Who Pays Closing Costs: The Real Estate Buyer or Seller?
7. Reveal offers on the table
One of the greatest myths when it comes to handling multiple offers on a house is that sellers and agents should not reveal information about the bids they have received. This is a misconception in home selling tips that has cost sellers and agents dearly. With permission from the seller, the agent can disclose how many other offers they have received for the property. This will motivate buyers to make even higher bids, thus resulting in a high sales price for the house.
8. Don’t be greedy
In an attempt to get the highest offer possible on your real estate property, avoid the temptation to be greedy. Don’t drag out the sale process hoping to get more offers. Being too slow could end up putting off the bidders that you already have. In addition, don’t be dishonest with potential buyers in an attempt to get high offers. For example, don’t exaggerate the state of your home when listing for sale. If buyers discover your deception, the offers could drop drastically.
Now that you know what to do when there are multiple offers on a house, work on generating them! Start by listing your house for free in the Mashvisor Property Marketplace.