The pandemic shook the real estate market and left some severe consequences. However, the property market is finally recovering, and home values are rising. For the first time in almost a decade, bidding wars have become frequent. While this is the best-case scenario for you if you’re a seller, there are still some things you should consider. Picking between offers isn’t always as easy as you might think. To help you out, we prepared a guide to choosing the best offer in a bidding war. May the best offer win!
How To Increase Your Chances of a Bidding War?
Before we examine how to handle several bids, let’s talk about how to improve your chances of starting a bidding war. One of the best techniques for obtaining multiple offers is to delay showings. This is how it works: you put your house in the multiple listing service on a Monday or a Tuesday, but you don’t let anyone inside until Friday. Although prospective buyers will have five full days to view your home’s listing, they won’t be able to arrange a showing before Friday.
That way, you’ll be generating demand for your house. You’ll be alerting people that your home is for sale and spreading the news. At the weekend, a line of interested buyers will be at the door.
Additionally, you can set an offer deadline for 12 pm on Monday. However, make it clear that you won’t accept any offers before that time. So, if someone has an offer for you on Friday, you won’t respond to it as soon as they walk through the door. Instead, you will wait until you collect numerous bids and then engage in a full-fledged bidding war. Then, to finally sell your home, all you’ll have to do is pick the best offer.
What’s The Best Offer?
Here’s a quick tip: The highest offer isn’t necessarily the best one! This is something every reputable real estate agent would tell you if you call them up right now. What sort of offer purchasers make—and what kind of offer you’re ready to accept—is influenced by many variables. The key to choosing the best offer in the bidding war is considering all the variables involved. In the event of a tie, you could require a tiebreaker other than price.
So how can you, as a seller, decide which offer to accept? First, take into account the factors below.
Closing Date
The closing date may be something you need to think about if you are relocating for a new job and have a specific date. It’s also essential if you want to buy another property and move into it by a particular date. Experts at Golans Moving and Storage suggest taking at least a few days for the move alone. The optimal offer in such a situation could be one that allows you to close the sale more quickly. This way, you’ll be free to go your own way instead of hanging around, waiting for the buyer.
Contingencies
A contingency is a clause that states that if a specific event occurs, the terms of the real estate contract will be nullified. An appraisal, mortgage approval, or house inspection are a few instances of contingencies. All purchasers are advised to include these stipulations. However, some may decide not to. The selling procedure will move more quickly with bids from purchasers that don’t include contingencies in their offers. Moreover, there is less chance the deal falls through if the person doesn’t go through with these contingencies.
All-Cash Offers
You do not have to wait for financing to be authorized by a lender if a buyer makes an all-cash offer. This dramatically increases the closure date flexibility. Additionally, it can significantly shorten the deadline—even by weeks. In some cases, an appraisal is necessary for loan approval, which adds another step that will delay the transaction. When time is a concern in your selection, you should consider an all-cash offer.
If you have to buy or move into a new home soon, all-cash offers are a great way to wrap up a sale of your old house in no time. If you need to transfer anywhere in the state, you might also have to consider the cost of hiring movers to help you with your long-distance move. Cash will come in handy here.
But what if the all-cash offer is smaller? Well, you don’t want to accept the highest offer to learn later that the buyer cannot support it. The buyer might not be able to borrow enough money to meet the offer amount if they make an offer that is higher than what their lender estimates the value of the home. The whole deal will fall through if they don’t get the money.
Final Thoughts – What If The Two Offers Are Similar
As a seller, you may reply to more than one bidder if two or more offers are nearly equal. However, you must be clear about the deadline and request the so-called “best and highest” offer. It might be tempting to continue that bidding fight, but remember that the bidding war can put off potential buyers. So, make sure you don’t hold onto offers too long. Instead, decide on a narrow deadline and stick to it.
In the end, the key to choosing the best offer in a bidding war is deciding what’s best for you and what feels right. While you and your agent should look at all the contributing factors, make sure you’re aware things are not always what they seem. Sometimes, a buyer will look good on paper until you start negotiating. Be careful and good luck!
About Gerardo Zavala, Realtor
There is a true passion for connecting people with real estate that makes me fall in love with my career over and over again. While my title says, REALTOR® I think I am much more than that. For example, I am present and actively listening to my client’s needs, on the spot when things are urgent, and by your side to say “congratulations.” Most of my clients will say that I am a connection away from support no matter the situation, day, or time. In my opinion, customer service, educating the client on progress and next steps, and overall satisfaction are my top priorities. How can I help you?
