Competition is Good for your Home
You have this great property for sale, and it’s just generated multiple offers. How do you use the competition to maximize your gain?
As the number of properties selling over asking price continues to rise on Oahu, more and more buyers are using creative tactics to make their offers stand out from the competition. Who’s to say that sellers can't use some of the same tactics?
These ideas work best when your property has generated multiple competing offers - what some refer to as a bidding war. Using these strategies in a less competitive situation will most likely be ineffective. In this market, competing offers are more and more common, and as a seller, you’re in a strong position to get the best offer possible, in both price and terms.
Talk to your Locations agent to determine the best approach for your property.
Strategies for countering multiple offers:
- Counter more than one offer on price. Write into the terms that if more than one buyer accepts your counter price, you have the option to choose which offer to accept as the primary offer. Other offers may be accepted as 'backup' offers.
- Ask for a higher initial deposit and/or a higher additional deposit credited to escrow a short time after the inspection approval. This shows strong commitment.
- Ask for a non-refundable deposit due after most of the buyer's due diligence is completed. If the buyer cancels for any reason after the deposit, the seller retains this money. The buyer's willingness to do this confirms their commitment to your property.
- Ask the buyer to pay for customary seller costs such as the termite inspection fee, condo doc charges, etc.
- Ask the buyer to delete some of their requests such as cleaning, pet treatment, etc.
- Shorten contingency periods and closing date. Shorter time frames reveal problems sooner rather than later, so you can resolve them or move on with a different buyer. Make sure the lender can accommodate an earlier close.
- Market prices are going up and comparable sales may not yet reflect the market increase and could result in your property appraisal being less than the purchase amount agreed upon between you and the buyer. To prevent this, get the buyer's commitment up front on how to handle the situation if comparable properties (comps) and the appraisal are lower than your asking price. A motivated buyer may be willing to make up the difference between the appraised value and sales price.
- Ask that the buyers be pre-approved for their loan with all their documents and credit report already reviewed. Ask for proof of the buyer's cash funds, as part of their acceptance of your counter offer and consider shortening the loan approval period. Have your agent contact the loan officer for the Buyer to confirm the details of their offer and that the Buyer can perform to those terms.