I was in a multiple offer situation last weekend with one of my clients. And as my clients had not been in a multiple offer before, I did have to prepare them for this and so I thought I would write a blog about it and hopefully help other buyers understand the process.
I saw the property with my clients when the listing first hit the market on a Wednesday. After viewing it, I advised my clients that if they were interested, offers were to be presented on the weekend and I thought that there would definitely be multiple offers. I told them that I would do a current market analysis of the property and we could then discuss what range an offer might be in. Depending on the number of offers, it could sell for more than the asking price in a hot market. But the most important point here is you only have one chance to make a good impression and so you should make your best offer the first time.
I offered some other negotiating tactics to maximize results for your one opportunity to make it count.
Typically the subjects written into the contract for a detached listing, would be subject to financing, inspection of the property, receiving and being satisfied with the title search,receiving and being satisfied with the Property Disclosure Statement and receiving and being satisfied with the oil tank documents (more information on request).
I suggested that we get copies of the title search, oil tank documents and the property disclosure statement beforehand, talk to their mortgage broker about the time required for the financing subject, and think about doing an inspection before the offer presentation (the down side of doing an inspection beforehand, is that you could spend the money to have it completed , but not be the lucky buyer .( Also, including an inspection clause can be a deal-killer!) If you fulfilled all the other subjects, then you would only be left with the financing subject. This can be looked upon in a favourable way by the sellers and is a good negotiating tool. In this case, my clients decided to do an inspection ahead of time. One other negotiating tool would be to ask what dates the sellers prefer for Completion and Possession.
It was pretty clear by the open house on the weekend, that there would be multiple offers on this property .The Open House was literally a gong show. There was no where to park on the street, one owner was upset because someone parked in front of his driveway, lots of people coming and going and it was an emotion-charged atmosphere.
When a realtor is working with a buyer and the buyer wishes to present an offer, we must declare to the listing realtor that we wish to write an offer. Just as an aside, the process is called a “blind bidding process” and we will never know how much the other offers are. We declared to the listing realtor that we would be writing an offer and she told us that there were two other offers. She then disclosed before presentation time, that one of the offers had decided not to write. A piece of advice I always give my clients when they are going into a multiple offer situation; do not hesitate to write an offer. It only has to be your best offer and does not necessarily have to be over-asking. However, the market analysis would help clarify what an appropriate offer would be. Quite often, buyers get spooked by the thought of competing with other offers, and they back out at the last minute and you might end up being the one and only offer!
Then at the designated time, (with the buyers close by) the buyer’s realtor presents the offer in person to the sellers. Then we wait – agonizing and quite a stressful time. In our case, I was called in to talk further with the listing realtor and the sellers and we made a few changes, and then our offer was accepted. We were told it was accepted because we did not have a “subject to inspection clause”. Very exciting time but we still had our due diligence to do in terms of the financing. Well, the financing was approved and subjects were removed. Everyone was ecstatic!