Bidding Wars: Dealing with Multiple Offers

If you’re a Realtor in the GTA, you’ve probably noticed an excess of bidding wars over the last few years. It seems like buyers are popping up in the dozens, but sellers are few and far between.

This is a simple case of supply and demand. The demand is stronger than ever, but supply levels are at an all-time low. The result? Sellers are receiving multiple offers for their properties. Now, if you’re a seller, this may sound great; multiple offers can give you leverage in the negotiation. But it’s important to understand that multiple offers can also be detrimental. For properties that sell with a single offer, the fallout rate floats around 10 percent. On the flip side, properties receiving two or more offers have a fallout rate closer to around 50 percent. Reason being that buyers often feel unduly pressured by a multi-offer situation. This can result in buyers backing out all together. Here are some tricks for sellers to minimize the risk of fallout:

Manners go a Long Way

Be polite and thankful. Manners often get ignored these days; it’s an absolute travesty for a sales person to neglect common courtesy. Thank your potential buyers and their buyer agents for their offers. Let them know that you’ll do everything you can to keep them informed along the way, and that you appreciate their interest. Be up front about needing to accept the best offer, but make it clear that you want to give everyone equal opportunity. Remember, a client buys a sales person before they buy a product. If the candidates like you and is serious about the purchase, they are more likely to follow through.

Don’t String People Along

If you have 10 offers on the home, and 4 of the offers fall short of the others, let the buyers know. Stringing them along will do nothing but create frustrations and complexities. People aren’t stupid; if you tell the buyers who’s offers you are considering that you have “x amount” of other offers on the table, they will assume you are playing hard ball. This will leave a bad taste in their mouths. If some offers aren’t up to par, cut them loose and let everyone know. This will show everyone that the aim isn’t to play games.

Don’t Shop Your Offers

It can be viewed as unethical to reveal other offers to your potential buyers. By attempting to create tension in a bidding war that already exists, you are using a pressure tactic that will all too often result in a dead deal. This type of scenario can result in you settling on an offer, rejecting the other offers, and then having your buyer back out because they felt pressured into over paying for the property. At that point, you’ll have to start fresh. Your best bet is to simply ask the buyers for their best offer so that you can avoid a drawn-out negotiation. Remember, the longer a negotiation ensues, the more likely the buyer is to cool off and reconsider.

Don’t Over Value Your Home

Only counter one offer at a time, and don’t be too aggressive. Be realistic about your home’s value as to avoid buyers walking away all together.

Don’t Be Pushy; Be Patient

If you want to get top dollar for your home with the least amount of headache, be patient. Make sure all parties agree on when to reconvene, and don’t turn the multiple offer scenario into a race. Pressuring buyers with deadlines will greatly increase the likelihood of the buyer walking away.

Make Sure Everything is Put in Writing

Never rely on verbal agreements, as this will not hold up in court. Every detail needs to be presented in a written agreement. This will cover your rear end if things get nasty.

Don’t Get Greedy

If you have a good offer on the table, accept it. Playing offers against each other will result in potential buyers growing frustrated with the negotiation process, and retracting their offer. I say this lightly, as you always want to get the very most that you can for your home. Understand that situations are circumstantial, and listen to your gut.

In a hot market like the GTA’s, handling multiple offers can be tricky. Keep a level head, and always consider the other parties involved. Transparency throughout the sales process is not only refreshing, but will typically result in the best outcome for all parties. Sleazy sales tactics are dated and ineffective.

 

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