Multiple Offers Becoming More Commonplace in Today’s Market.
In our current market, it is becoming increasingly common that more than one buyer is often interested in a listed property; hence a bidding war/ multiple offer situation arises.
It is very important that you work closely with your real estate salesperson to make sure you understand this process. The decision of how the offers are presented and countered is up to the seller. The seller, of course, decides which offer is accepted.
While the listing agent will advise the buyer’s agent on how many offers are registered, they will not provide any further details, including the value of the offers. A seller facing competing offers has to consider how they want to deal with the situation. The seller can decide to accept the best offer, negotiate with one buyer and reject all other offers, negotiate with one buyer and advise other buyers that their offers are being set aside while the seller negotiates or reject all offers.
The buyer has the choice to enter into a multiple offer situation and of course, makes the final decisions relating to their offer.
There are some considerations which a buyer should be aware of. Many times the urge to remove conditions from the offer is considered; for example, inspection or financing clauses. These clauses are in place to protect the buyer and one should think hard before deciding to remove them.
Many buyers will have been pre-approved for a mortgage. When entering into multiple offers; a buyer may find themselves extending their finances beyond what they’ve been approved for. Another consideration, closely related to the aforementioned is that the home may not be appraised by the lending institution as high as your offer; hence creating a short-fall in financing. One will often end up having to provide a larger down payment to compensate at this time. While a higher offer could raise the buyer’s chance of securing the home, will it be the best long-term financial decision for the buyer?
Certain areas a buyer can make their offer more enticing beyond the price, are meeting the seller’s closing date; increasing the initial deposit with the offer and not requesting extra chattels. Even in a competing offer situation, buyers have other options and may choose not to continue to participate.