by Nick Malouff
Why the right REALTOR is critical for home selling or buying success – especially in a hot seller’s market.
When the real estate market reaches the red-hot levels we’ve experienced over the last few years, it’s safe to say that most homes will sell quickly. However, does that mean you don’t need a highly qualified agent to help navigate the complexities?
The high demand for property in this market has actually made selling or buying a house more complicated than ever! It’s impossible to cover all of the complexities here, but the following is a snapshot of what sellers and buyers are up against in today’s real estate market.
Counter Offers In our market, it’s not uncommon for a seller to receive multiple purchase offers right out of the gate. A seller cannot respond to multiple offers by sending a simple counter offer to each offer without creating a potential legal issue. If more than one buyer accepts the counter, each would have a legally binding contract, but the seller would not be able to sell the property to more than one buyer.
One strategy for handling a multiple buyer offer situation is for the seller to respond to several buyer offers simultaneously using a “Multiple Counter Offer” to some or all of the potential buyers.
Responding to a Multiple Counter Offer If the seller receives one or more responses to a multiple counter offer (either accepting it, or in turn countering it), the seller must accept and sign one buyer response in order to make the contract ratified. But what if all the buyers sign the Multiple Counter Offer? If a buyer simply accepts the Multiple Counter Offer, that does not mean the buyer has a valid contract. The seller also has to accept the buyer’s acceptance of the Multiple Counter Offer.
Once the purchase contract has been signed by both seller and buyer, neither can arbitrarily decide to cancel it. However, until the Multiple Counter Offer is ratified by both buyer and seller, the seller can accept an offer from a completely new party.
Responding to Multiple Offers The seller and his or her agent must weigh the advantages and risks of each approach. Sending a Multiple Counter Offer effectively cancels the offers that were originally sent by the buyers. However, it also clearly announces that several offers are being considered. The buyers could respond in a multitude of ways; they may be motivated to improve their offer, they may decide to resubmit their original offer, or they may decide they don’t want to get in a bidding war and not respond at all.
A seller’s agent may decide to discuss each situation with the buyer’s agent to gain a better understanding of the situation for each buyer which could help the seller make a more informed decision. The value of a smart agent in these situations is hard to overstate. The wrong decisions could be very costly for both seller and buyer!
Multiple Options for Multiple Counter Offers Just as each of the buyer offers submitted probably have different terms and prices, the multiple counter offer may have different terms and prices for each of the buyer offers. The seller may like the contingencies (or lack of contingencies) in one of the offers, but not the price. Conversely, the seller may like the price but not the contingencies. Even though it is a simultaneous offer made to several potential buyers, responding with different terms makes each buyer more likely to accept the multiple counter offer.
One seller strategy is to respond with different multiple counter offer terms, trying to get the best terms while also trying to play it relatively safe. The seller could respond to one of the offers with changes that would probably be accepted and reply to other offers trying to get the best result.
On the other hand, after the seller’s agent discusses each buyer situation with the buyers’ agents, the seller may simply decide to accept the first response to the Multiple Counter Offers if they are confident the fastest response is the most motivated buyer.
Other Options That Add Complexity Now, during this process, or possibly before, the seller may be approached by an iBuyer, one of the many companies whose strategy is to buy your home and then resell later at a higher price. Buying and reselling homes for a profit is their primary mission. Is a home seller better off taking the potential quicker sale to an iBuyer or going through the process defined above with a good agent?
It stands to reason that if an iBuyer is willing to pay a certain price for a home, they believe they can resell it for a higher price. In other words, there could be money left on the table but exactly how much is difficult to determine unless the seller goes through a similar process described above. Having the most qualified agent on your side who understands this process could net the seller tens of thousands of dollars more than any other option.
The experience and skill of the agents involved can dramatically affect the outcome and the same qualified agent can also help the seller make an informed decision about an iBuyer offer. Both the buyer and seller need to employ the most qualified agent they can find to navigate the complexities of a hot real estate market to increase their odds of success and to gain the best possible deal. Considering the skill and experience it takes to navigate these complexities, a good agent can be worth far more than the commission paid to him or her.
Brought to you by Better Homes and Gardens Real Estate BloomTree Realty. Better Homes and Gardens Real Estate BloomTree Realty has won more “Best Of” Consumer Survey awards than all other brokerages in the area combined in the last three years. This is what we mean by “Expect Better.”