Multiple Offers – A Great Problem To Have

So, your home is on the market.  Your hoping and praying that it sells quickly.  In the back of your head though you have doubts.  “Is it priced right?  Did I stage everything so it shows well?  Should we have painted the upstairs bedrooms back to a neutral color?”  Then the phone rings and you have your first showing.  You open the blinds to let light in, vaccuum the floors, gather your things and go sit down the street and watch.  Maybe you go do some shopping.  Then you get home and check with your agent or showing service to see if there is any feedback.  The nerves start to set in.  Sound familiar?

Over the next week or two you get more showings and each time you are met with the nervousness of seeing if they will put in an offer.  I’ve been there.  Even as a real estate professional, let me tell you, it is nerve-wracking.  All you want is that offer to come in.  So, what happens if you get more than one offer?  I know, I know, it’s a problem that most people dream of having.  It can still pose some potential problems and I wanted to take the time to address them with you because I just went through it with a client.

Legal Clarification

Let’s start with a couple of definitions and then put them into a real life scenario.  First and foremost, an offer is just that.  It has no legal bearing whatsoever.  A Contract is a legal document that both sides of the transaction have agreed upon and executed.  The difference is huge and often muddled because many agents refer to offers as contracts just because they submit their offer on a contract form.  So, if you hear that there are multiple contracts on a property, that is false.  In the State of Texas, anyway, the law allows only one contract to be on one property at any time.  What the agent is really saying is that there are multiple offers.

What To Do If You Get An Offer

Great news!  Someone wants to buy your home.  You start to relax a little, you feel like the hard work is done, and your home is now off the market.  Don’t get ahead of yourself, now.  It is just an offer and the truth is that the hard work is just starting.  There are negotiations, financing, inspections and more that still have to be done.  There is one other thing that should be done and I’ll bet you haven’t thought about it because you are so happy that you have one offer.  Why not try for multiple offers?  Your agent should call around to the other agents who showed and see if they can’t get them to submit an offer.  What can it hurt?

What To Do If There Are Multiple Offers On Your Home

Well, first what you want to do is put down the phone and dance around your living room, office or wherever you are.  Congratulations!

If you get multiple offers, the process becomes fairly simple.  We put out a call for the “highest and best” offer and put a deadline on it (usually 24-36 hours).  At the deadline, we look over what we have and make a decision.  You take the best one for you and ask the others if they would like us to hold their offer as a backup.

What you don’t want to do is try to play the offers against each other.  Not only, in my opinion, is it a shady way to do business, but it really isn’t fair to the buyers.  Let them look it over, make their highest offer and if they get it, they get it.  There is no negotiation or haggling.  Everyone gets a shot and the best shot wins.  The main way to do this is to enforce the deadline for offers without exception.

Case Study

Multiple offers are not uncommon at all with foreclosures, but you aren’t selling a foreclosure so here is a real story of a situation that happened last week.

The home showed three times in five days after being listed and all three submitted offers.  The Sellers are building a new home that won’t be complete for another four months.  The first offer came in pretty low but offered them a chance to lease the home back until their new home was complete.  The second offer was better and also offered a lease until the new home was complete.  The third was full price but only offered a two month lease.  So, we called a deadline 36 hours later for “highest and best” offers.  At the end of the deadline, the first two offers had come up and the third actually pulled out.  The difference between the two offers on the table was very minimal but the second offer won because the Sellers were a little better off with it.  So, one week after listing the home we had a great contract that allows them to stay in the home until their new house is complete and a back-up in case something happened to the first buyers.

Not too shabby right?  Wouldn’t everyone like to have that problem.  It is not common in this market, true, but it can happen and it can be created by a little proactive work on the part of the seller’s agent.  Thinking that just because you got that first offer means that you can’t get more is very near-sighted.  If your agent is going to try to drum up more offers for you from past showings, call them on it.