Bidding wars, or the way we wage them in Washington area real estate, may not be the best way to get the most attractive offers in front of our home sellers, and they often set up transaction-threatening issues for buyers that show up on the way to settlement. Buyers and their agents are not fond of them (actually, I really hate them), and many sellers get calls a few days from accepting what they thought was a fabulous offer, only to hear that the buyers are moving to France to get out of the deal.
So what’s the answer?
At a recent RLAH training session, one of our top listing agents outlined his strategy for handling multiple offers, which he is seeing a lot of these days. Here are the basics:
As the offers come in, he does an analysis of each one, with the price, settlement date, earnest money, financing, and the type and duration of each contingency. When all of the offers are in, he ranks each major element of each offer compared to the other proposals on the table. Then he shares that information with each buyers’ agent and sets a second deadline for submitting a best and final offer. He does not include the prices in each offer, but if there are ten offers on the table and you are number nine, you can make changes if you really want the place, or you can pick up your marbles and move on to the next house you like.
In any situation where there are multiple bidders, the buyers who “lost” are sometimes stunned at the price and terms the seller took, which they might have gladly matched or exceeded had they been given the chance. If they included contingencies for a home inspection, financing and an appraisal, they could make the choice to clean up their offer – or not. Giving would be buyers more information allows them to make more rational, intelligent decisions about how or whether to improve their offers. While this approach won’t eliminate the stress inherent in any real estate transaction, it can ratchet stress down a few notches.
My colleague’s approach also helps reduce the chance of aggravated buyers’ remorse, when the winners wake up a few days later absolutely desperate to walk away, leaving the sellers back at square one having lost all of the momentum of a new listing.
Of course, I’m one who wonders why on earth we don’t share the actual price and terms of the offers that are competing with ours. We’re like Christies or Sothebys would be if they had only secret, sealed bid auctions.
If you are getting ready to buy or sell a home in this busy market, I can help! And I’ll never be too busy to help you, your friends or family members make their next move – and to make the experience as smooth and enjoyable as possible. Please contact me at 202-549-5167, and I would be honored to help.