How a Buyer Can Prepare for Multiple Offers
This is an interesting real estate market and even though we're not where we were just ten years ago, inventory is low and because interest rates are also low, it becomes a bidding war for many multiple offer situations. It can also be a very frustrating time for buyers. We've had buyers that have lost deal after deal due to multiple offer situations, but with the right preparation, planning, and of course, a great agent that can negotiate on your behalf, you don't have to lose out on every detail.
Before knowing how to handle multiple offer situation you need to be prepared for it. Here are some things to consider:
The listing agent nor the seller has to disclose the other offers. The listing agent can only tell you the other offers if the seller authorizes it. You can ask, but unless there's an escalation clause, the seller doesn't have to tell you there have been other offers.
Sellers don't have to negotiate with the first offer given. In hot seller's markets sellers will often pick a date to review all offers. This creates some urgency for buyers and sellers can review all offers at once, rather than having them trickle in and hope for a better offer down the road.
Sellers don't always accept a full-priced offer. Just because the offer is full price or even all-cash, doesn't mean the seller will accept it. Other perks may be more enticing, including no contingencies, fast closing, or certain details in the offer. A great buyer's agent will find out these incentives and make sure they are in the offer.
Don't assume verbal agreements. Verbal agreements are nonbinding when it comes to a real estate transaction. Only agreements in writing and signed off on or agreed upon by both buyer and seller can hold up in court. Even though it's faster to make verbal agreements, it's important for buyers to understand that must be in writing and signed otherwise it is not enforceable.
Sellers can tell other buyers what competing buyers are offering. There's no legal reason why the seller cannot inform the previous buyer. The seller may want to do is to entice the buyer to bring a better offer.
Multiple offers can be a tricky situation but it's important to understand what the buyer and the seller can and cannot do. In order to get the house you want it's important to have an agent that is familiar with multiple offer situations, is proficient in an escalation clause in order to up the price over the highest bid, and negotiate for what the seller really wants.
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