What To Do With Competing Offers On Your Property - How Do You Choose the Best Offer
In any town or suburb where the demand from prospective buyers exceeds the number of homes for sale, it is usually only a matter of time before property sellers start to receive competing offers to purchase – and then have to decide which of them to accept or reject. While this may seem like a good problem to have, the decision might not always be as easy to make as you think, mainly because all too often, selling a home is about more than just the money.
The conundrum
What if you receive an offer that is considerably more than your original asking price but on condition that you move out sooner than you were hoping and give the buyer occupation by the end of the month? The reality is that you may not be willing - or able - to accept it. But if it’s an offer you simply can’t refuse, then you will find yourself making the necessary arrangements in order for this to happen. On the other end of the spectrum, you may choose to accept a lower offer from a prospective buyer who has already been pre-approved for bond finance, simply because it will eliminate having to wait for another person to organise finance or sell their current home.
Consider all the factors
Indeed, there are many factors to consider and, as any good estate agent will agree, you really need to look beyond price before you decide – and to resist being pressurised into making a hasty choice that would ultimately be wrong for you. For example: a buyer that makes a good offer but says it is only on the table for a couple of hours, is probably not that serious and if they are, they’re likely to prove difficult to deal with during the transfer process – and who wants that?
So what steps should I take when making a decision?
So, if you do end up in the middle of a “bidding war” for your home, you should start by looking for the offers with the fewest contingencies or “get out” clauses. Ideally, your would-be buyer should not have another property to sell before they will actually be able to buy yours, and should have home loan pre-approval so you can be confident that they really will be able to secure the necessary home loan within a few days.
Next, you may want to consider which prospective buyers are most willing to accommodate your timing with regards to occupation of the property. If you need to delay a move until the end of a school term, for example, or until the end of a work contract, that can have a significant influence on which offer you will accept.
In addition, you should try and find out whether the competing buyers already have the cash in hand needed to pay a deposit, as well as the transfer duty, bond registration costs and legal fees. It is no good accepting a higher offer if you are going to have to wait months for that buyer to get the cash together. At the end of the day, your agent should in fact only be bringing you offers from people who are financially able to buy your property, as well as willing to do so.
The power of negotiation
You also need to make sure that you negotiate transparently and in good faith. For example, if you tell someone who made an offer on a Saturday morning that you’re not going to respond until Monday, you must also tell them that this is because you are expecting further offers after your show house on Sunday. If you then receive several similar offers, you should be open about those as well, and give each of those prospective buyers the opportunity to confirm that this is their “best and highest” offer, or to find out what it would take to make you pick their offer and decide if that’s something they’re willing to do. You must then, however, be prepared to accept the improved offer. Tempting as it may be to keep a “bidding war” going, most buyers won’t like it, and as a result, you then run a very high risk of ending up with no solid offer at all.
There are many factors that need to be taken into consideration when choosing the best offer for your home. It’s a decision that can take quite some time and thought, but because it’s an important one, it’s better to consider everything you need to before drawing that final conclusion.
Source: Better Life Home Loans