For most home sellers, being on the receiving end of a bidding war can sound like a dream scenario. But as with almost every other aspect of buying or selling a home, having to choose between multiple competing offers can also be a stressful and high-stakes experience that requires forethought, lots of advance planning, and careful consideration.
For example, should you always just take the highest offer? Or are there any other factors that should influence your decision? And how do you compare offers that have different closing dates, varying financing requirements, or that come with different conditions?
To help you make the best decision, here are a few things to keep in mind if you find yourself in the enviable position of receiving more than one offer at the same time when selling your home or investment property.
1. Do your research
First and foremost, do as much research as you can on your local real estate market before you list your property. If you know what similar competing properties in your area have been selling for, it will give you a much better idea of the price you should be asking, and which (if any) of the offers you receive are fair value.
If you’re not sure how (or don’t have the time) to exhaustively research the latest market trends yourself, working with an experienced REALTOR® can be a great way to get some objective advice while also saving yourself a lot of headaches, hassles, and wasted time.
2. Assess and rank the offers
Next, as soon as you start receiving any offers, make a detailed list where you rank each offer in order from most to least promising. The dollar amount of each offer will likely play a starring role here. But the highest bid won’t always automatically be the best choice.
Other factors like how strong the buyer’s financing is, the size of their cash deposit, whether or not they’ve been pre-approved for a mortgage, and how many conditions they’ve attached to their offer for things like home inspections or obtaining financing can all make a slightly lower offer suddenly seem more attractive than a higher but less serious one.
In addition, depending on how quickly you want or need to move, having a more flexible closing date could also be a key factor in choosing which offer makes the most sense for you. So before you make your choice, sit down with your family, your REALTOR®, and anyone else who will be affected by your decision, and identify exactly what your needs and priorities are, and which considerations are most important to you.
3. Don’t be afraid to negotiate
Finally, if you receive multiple offers, don’t be shy about using that fact to your advantage.
Once you’ve identified your top two or three offers, talk to your REALTOR® about the possibility of letting the would-be buyers know they’ve got competition. Then set a deadline to hear their responses, and see if any of them are willing to come back with a counter-offer that sweetens the deal.
This could mean raising the price they’re willing to pay, removing some of their conditions, changing their preferred closing date – or even a combination of all three.
Just be aware that this is a potentially risky tactic, as it could lead to one or all of the buyers getting cold feet at the prospect of a bidding war and deciding to back out. So if you’re tempted to go this route, be sure to discuss the pros and cons (as well as any potential financial, ethical or legal implications) with your real estate professional first.
Alternatively, you could also simply choose the best offer and make your own counter-offer. This removes some of the stress and risk of starting a bidding war, while still helping to make sure you get the best possible price for your property.
4. Ask an expert for advice
Of course, if you have any questions about how to handle multiple offers – or any other aspect of the homebuying or selling process – it’s always a good idea to start by asking your REALTOR® for advice. If you don’t have a REALTOR®, call or email us for a free chat, and we’ll do our best to answer all the questions you have – and probably a few you haven’t thought of!