With the current economic climate the way it is and you have a property for sale, you can be thankful for even having one prospect for your property. Things are kind of tough these days. Fortunately we are in a part of the country where things will most assuredly improve; people like to move to East Texas.
Once in a blue moon we will have a property on the market that is so hot that several purchasers will materialize at one time. How do we deal with this and treat everybody fairly? This becomes a delicate issue because, when all is said and done, there will be disappointed buyers, buyers who may think they have been mistreated by their own agent or the agent for the seller. Any purchaser of property listed with a real estate company needs to be informed that the real estate broker is contractually obligated to obtain the highest net proceeds possible for his client. With multiple offers there are several possible scenarios and the best route for the seller to take is not always evident. For example, lets assume you have your house for sale for $125,000.00 and you get a cash offer of $120,000.00 and an another offer for full price contingent upon the buyer’s obtaining financing. What do you do? Assume you have tried to negotiate the cash buyer up to $125,000.00 and he doesn’t budge. You elect to go with the buyer requiring financing. The buyer goes to a local bank and gets turned down, so you go back to the cash buyer and agree to sell to him for $120,000.00 only to find that he went on his way and bought another home. What a bummer! One thing your agent could have suggested to you is that you agree to let the $120,000.00 buyer be a backup buyer at that price. That way his purchase could slip right into play upon the failure of the other contract.
One of the fun things about having multiple buyers is that the purchase price can often times be bid up above the asking price for the property. Last year we sold a house on Lake Jacksonville that had three offers from three different agents who worked for another real estate company. Two of the offers were for cash and one contingent upon financing. After deliberating a brief amount of time with our client to strategize a response the decision was made to give the offerors 24 hours to reconsider their proposal. Because there were two cash offers the buyer seeking financing was told that financing contingency offers would not be considered. In the end the house sold for approximately $5,000.00 more than it had been listed for. Even after having gotten the Buyers’ higher offers the seller still could have asked for more money but it is important to know when to stop. It is possible to get too greedy and shoot yourself in the foot. Just as an aside, a seller has no obligation to sell to the highest bidder. The seller may know one of the lower bidders and just feel like he wants that person to have the house.
One of the key features of dealing with multiple purchasers is that the offers are typically never disclosed to the prospective buyers. To do so would create an open auction environment in which bids might become incremental when they could have been otherwise much higher. An open auction environment is only advisable when there are several prospective buyers..........and it’s a real auction.
Remember that your agent is always obligated to get the best possible deal for you, even if it means having to share half the commission with another real estate broker. Remember also that the highest contract price is not always the best deal. On rare occasions a lower price might still result in higher net proceeds to you, as some loans require the seller to chip in money. Things are never as cut and dried as they seem.