The Pros and Cons of Multiple Offers

The prospect of having multiple offers on your home is a ideal situation, right? With multiple people all trying to buy your home at the same time! There couldn't possibly be anything wrong with that!

 

Well there are definitely some pluses, but there are some significant risks to the prospect too.

 

The Pros:

• You will likely get close to "market value" for your home. In some cases you might even get full asking price or more.
• You will likely find an offer that matches all, or many, of your needs - possession date, inclusions/exclusions, etc.
• You likely won't have long protracted negotiations. You will likely get offers with only a few conditions. Maybe you'll even get some offers without conditions.

And now some of The Cons:

• Buyers are skeptical about competing offers - especially in today's buyer's market! The don't like getting dragged into a bidding war on price with the possibility that they will pay more than market value, and are more apt to just walk away. If you announce to all your potential buyers that they're competing with other offers, then they may ALL walk away. Then you're definitely worse off than if you only had a single good offer.
• If your counter offer is overly aggressive, you may alienate the offerer. Then you'll need to go back to the other offers and see if their still interested. Not a great situation to be placed in.
• If you accept an offer that is over market value, then when the appraisal for the buyer's financing comes in, they may just crater the deal.
• If you accept an offer that has no financing condition at all, then the buyer may not be able to get financing at all and you may not find out until the day before possession. That would leave you all packed, somewhere to go and two mortgages to pay. You may end up keeping their deposit, but will that cover the extra mortgage and the stress of putting your home back on the market?

In today's market, getting multiple offers on your home is a great affirmation that your home is in high demand, but make sure you look to your real estate professional for advise on how to proceed and to guide you through negotiation in this cautious market. As a seller, one option often overlooked is to accept the very best offer, then negotiate a second back-up offer that comes pretty close. It's worked for my buyers a few times this year when the first deals fell apart - once on home inspection condition (and the buyer wanted to "renegotiate" the price) and another case with financing.