Yes the real estate market is HOT! And yes, it’s all over the news and Social Media. It is also a popular subject in the workplace.
Everyone wins in the multiple offer situation frenzy, right? Well, not exactly.
It’s human nature to go to work and tell colleagues you a) sold your home in 3 days, b) received multiple offers & c) sold it well over list price. Similar to stories about gambling in Las Vegas – you only hear about the winning. And yes, people do win. But quite frankly, not everyone does.
Many Sellers are forced to put the house back on the market which nets far less (after the 1st weekend hype). How does this happen? There is much more to getting and selecting the right offer than simply the price. Most often, the problems occur when the Seller either tries to sell on their own or when they use discount heavy and/or untrained agents, part-time agents and friends-of-friends agents.
In a hot market, homes may go quickly, but the work required to keep those sales moving forward to a successful closing is far more than most Buyers and Sellers understand. A qualified agent, familiar with all the nuances of a hot market, can help you avoid unnecessary and costly mistakes.
Here is a partial list of some of the things that can go wrong in a Multiple Offer situation:
Pre-Sale Preparation - Just because it’s a hot market, doesn’t mean all homes will sell As-Is.
· If the listing agent doesn’t have a systematic plan and guide they share with Seller to prepare the home for sale to maximize the sales price, that first weekend frenzy may not result in multiple offers.
· Decluttering, minor repairs, landscaping and professional staffing is still critical. Your listing agent should have a list of trusted contractors they can call on and get to work ASAP. Note: Contractors are back logged today!
Pre-Inspection – In this type of market, it is critical that Sellers understand that prospective Buyers may want to have a pre-inspection done prior to putting in an offer. There are advantages for the Seller in doing this, including that some offers may come in waiving the more formal inspection as a criteria of finalizing the sale.
· Listing Agent does not properly inform Seller of the advantages of a pre-inspection prior to listing.
· Listing Agent does not properly identify items that need to be addressed and more importantly, what doesn’t need to be addressed.
· Listing Agent doesn’t require perspective Buyers Agents to adhere to the Proper Pre-Inspection Protocol & forms.
· Listing Agent allows pre-inspections to take place during an Open House.
Try to Play Hard Ball - Overzealous & untrained Listing Agents may try to play too much hard ball. That can force ALL the potential buyers to walk away.
Early Offers – Overzealous Listing Agent may advocate for accepting 1st offer (on Friday) prior to scheduled Open House.
· This is always the Seller’s call, but it can create more problems for the Seller down the road.
· Listing Agent solicits an early offer to use as bait during an Open House or with other agents call. Backfires/scares away qualified would-be Buyers.
Earnest Money – Listing Agent doesn’t demand enough Earnest Money. Buyer not afraid to walk away if too little EM is promised OR worse, uses the threat of walking away if Seller won’t re-negotiate.
Title & Escrow Companies – Buyers agent uses T&E company that forces large lenders to then require a sub-escrow (=Addt’l fees)
Pre-Approval Letters - Listing Agent does not know how to properly vet would-be Mortgage Brokers & Lenders prior to final offer selection.
U.S. Funds – Our market activity includes a lot of international buyers. Your Listing Agent needs to know how to ensure foreign funds are properly “Seasoned” in the U.S.
Proof of Funds – Listing Agent does not know how to carefully vet the “Proof of Funds” attachments to a Purchase & Sale Agreement on cash offers
Appraisal Differential Disclosure - (this is Huge). Listing Agent does not know how to assure additional negotiating won’t take place due to a low appraisal.
Appraisal Differential Handling – Listing Agent only does a few transactions a year and fails to inform the Seller they don’t have have to cave-in so Buyer can get a loan.
NWMLS Forms – Listing Agent not familiar with all the proper NWMLS forms – uses wrong form – opens door for re-neogotation.
HOA Handling - Listing Agent doesn’t know how to set this up as a non-issue & provide the appropriate documentation prior to any offers.
Neighborhood Review - Listing Agent doesn’t demand that the Buyer takes cares of this prior to writing an offer.
Seller Disclosure (Form 17) – Listing Agent doesn’t verify the completeness of the Form 17. Seller omits one line item. Buyer has reason to cancel.
Septic Inspection - Buyer got caught up in the frenzy and changes their mind. They may try to use the Septic Inspection as a means to get out of the transaction.
Multiple Offer Recap (Night of Offer Review) – Listing Agent does not have a formal process and form to explain all the nuances of each very different offer.
Multiple Offer Communication Handling - Listing Agent has to very careful when and how to communicate to the offers that did not get selected. Communicate too soon-only to find out the 1st offer changed their mind OR Communicate too much in the “sorry the Seller selected another offer”
Deceptive Buyers Agents – Unfortunately, there are a handful of Agents who have found a way to lock up homes, just to threaten to wiggle out if the Seller does not renegotiate.
Deceptive Buyers/Investors – Unfortunately, there are some of these too. They find ways to beat the system and force a re-negotiation knowing you don’t want to relist and risk not getting over asking price.
FREE Legal Advice - Buyer got caught up in the frenzy and changes their mind. They seek the FREE legal advice from their work to get them out of their contract. Now what? ( Happened to another agent last year who accidently omitted one party (the Buyers Agent brokerage) on an email communication.)
What happens in the Summer and Fall with Multiple Offers? It is a very different beast.
“Thanks Bob. You absolutely nailed it! Thanks to your instructions and experience we a) sold for $77,000 over list price, b) saved thousands from your Flexible Seller Commission Cost Program and c) allowed us to focus on our upcoming move-knowing we don’t have any further obligations. We plan on putting a huge down payment towards our kids college tuition. Thanks again for all you did for us!” February 2017, Brad-Sammamish, WA
Please give me a call first. And naturally, there is no obligation.
I promise that if you: Give me 10 minutes and I will show you how to sell for more, and pay a lot less doing it.
Bob Papke | 206.890.5124 | [email protected]