When real estate inventory is moving quickly, how can you navigate effectively while dealing with a multiple offer situation?
London’s real estate market is sizzling, and inventory appears to be low in many desirable areas of the city. This often leads to a frenzy of motivated Buyers vying to win bidding wars on highly sought after properties. Receiving multiple offers on a listing is a great position for a Seller to find themselves in, often giving them the upper hand in negotiating. In such situations, disclosure will be made to all parties involved regarding how many offers have been submitted. New legislation has recently been put into place to ensure that fairness and honesty is maintained when dealing with multiple offers. All registered offers must be submitted and retained by a Brokerage, ensuring that all offers are real, and not falsely instigating a competition. All offer situations should be handled with care, but extra considerations come into play when competition is steep.
Some tips for Buyers…
- Get there first. Time is of the essence in a market like ours, and the sooner you can decide to put pen to paper and make an offer, the higher likelihood that you can work towards negotiating an offer before someone else beats you to it.
- Inquire about the Seller’s preferences regarding closing date or chattels – maybe your ability to accommodate a moving date, or leave a favourite appliance out of the deal will put your offer at an advantage.
- Keep your terms competitive. There are often ways to tighten up conditions, and sometimes even remove them to make your offer more appealing to a Seller. Having a competent team of professionals working on your behalf may help with this.
- Be realistic. A lowball offer may only drive up competing offers, increase market value in the neighbourhood, and lead to higher prices when the next gem becomes available down the street. If the property is listed at a reasonable price, and you want a fair shot at a Seller choosing your offer, trust your Realtor’s strategy to do their best to get the job done on your behalf.
- Instill confidence that you are qualified. More and more deals are falling apart over financing these days. If a Seller knows you are preapproved, this will add some weight to your offer as well as show that you have been diligent in your preparations. Your lender can typically draft a letter to prove such.
- Remain objective. It is easy to get caught up in the chase. Sometimes this is impossible to avoid, sometimes it’s worth paying a little more to snag that ‘perfect, once in a lifetime property’, but sometimes it’s better to walk away and wait for a more reasonable opportunity to come along.
- Ensure value is justified. Take a good look at comparables to ensure you are not drastically overpaying for a product you will not recoup your value from should you decide to move in the future.
If you’re a Seller…
- You can instruct your Realtor to allow each Buyer’s agent to present their offer in person, or simply forward it for your review. Sometimes, Sellers prefer to hear directly from the Buyer’s Representative, other times, it is less overwhelming to simply review offers at hand with your Listing Representative who can assist in preventing any kind of bias.
- Review the offers carefully – purchase price is important, but so are the other terms such as closing date and conditions.
- Do your homework to ensure prospective Buyers are qualified, with preapproved financing in place. It’s a huge set-back to accept an offer, only to see it fall through due to unapproved financing. In the process, you may have lost the interest of other interested parties who may have moved on to something else. This can be detrimental to your negotiating power.
- You will be faced with several options when confronted with multiple offers. You may choose to send all offers back for revision (in case anyone wishes to tweak their offer and increase its appeal), you could sign one offer back with changes in the hopes of securing an acceptance, or you could accept one offer as-is.
- You may NOT sign back more than one offer as this could put you in a precarious legal position should both Buyers accept your revised terms. Under this circumstance, you would have sold your property twice (subject to conditions in each offer).
- As with all real estate transactions, it’s not firm until it’s firm. Keep the terms of your agreement confidential until all notices and waivers have been submitted to lock in the deal. If you end up with a fall-through, you may not want other parties aware of what terms were negotiated.
There are many elements of negotiations to be aware of, especially given a multiple offer scenario. From ethics to emotions, efficiency to experience, each circumstance may require a unique approach to ensure you are represented in the best manner possible. It is imperative to ensure that a Realtor is protecting your best interests, and that you have a savvy negotiator who will ensure you are putting your best foot forward when competing on the purchase of a property.