At Oakwyn, we want to make sure we are continuing to provide value and insight within the Real Estate Industry. This includes sharing our knowledge and experience with our community.
For this month Oakwyn Managing Broker, Eric Grant is here to shed light on navigating multiple offers. Eric provides his tips on how to get an accepted offer when you are the Buying agent in a multiple offer situation.
Read on for Eric’s advice and get in the know, with Oakwyn.
From the get-go, you need to manage your buyer’s expectations. For example, if a single-family home on Vancouver’s Eastside is being presented at $ 1.3 MIllion, chances are it will not sell for that. You need to have a conversation with your buyer and say, “are you prepared to pay $1.5m, $1.6m, maybe more?”
If the answer is yes, then the client can view the property and plan to proceed through the buying process.
Once you have committed to making an offer, you need to prepare your buyer’s offer with terms and conditions, and potentially including subjects, or lack thereof. As their agent, we want to ensure that they are protected in regard to subjects, clauses, and conditions. However, in the multiple offer world, this could prevent a potentially successful bid from being accepted.
You need to explain the risk of not having any subjects on their offer including advising them to seek legal and accounting advice prior to writing a subject-free offer.
With your client now emotionally involved and wanting this home, you need to discuss what price they are happy paying. In a multiple offer situation, market value says one thing and emotions say another.
Some listing agents have a “one-time shot” to do your “best and final”. You have to be sure that your clients do just that. If they lost the home for a couple thousand dollars, how would they feel? If they have the means to increase that offer price, it might be best to do so. If the answer is “no” and they are happy with the offer price. That is where they need to be.
When presenting your subject free offer, include a copy of the deposit cheque. In your contract, include that the deposit shall be payable “upon acceptance”. This way, once the sellers sign your offer, it is a firm contract. Providing a copy of the deposit will give security to the sellers that it is a firm offer, with a monetary value submitted as security.
If a buyer is able to increase a “standard” deposit, which is usually around 5%, it will once again provide added security to the seller.
You did it. Your buyer now has an accepted offer. In this rapidly changing market, you will need to discuss with your buyer that the appraisal might not come in at “accepted offer” price.
If this is the case, you need to explain that your buyer will need to “top-up” the deposit. Remember the appraiser works for the bank, NOT the buyer.
For example: Accepted offer at $ 1.5 million, the appraisal comes in at $ 1.4 million. The buyer will need to pay the difference of $ 100,000 as the lender will only provide funding for $ 1.4 million.
Communicating With Listing Agent
As the buying agent, you are trying to put your best foot forward to secure the property for your buyer. Ensure that you keep in constant communication with the listing agent during “offer” day. You will want to see if you are, in fact, in a multiple offer situation and, if so, how many offers are being presented.
Upon presentation of your offer, you will need to show compassion for the sellers, enthusiasm for your buyer’s excitement, confidence in your buyer’s ability to close, all while being professional.
Once offers have been presented, you will want to be in constant contact with the listing agent to make sure your offer is being considered. If it is not, does your buyer have the ability to make it one of the contenders? One final note, make sure that both you and your buyers DO NOT fall asleep. You laugh, but it happens more than you think.
In This Together
We are in this together to improve the real estate industry! Let’s stay on top of what we need to do to continue to lead the way in providing professional, ethical, and excellent service to those we serve.
For more information check out our website, or contact us!
About our Broker Break series:
These blogs aim to leverage our Managing Brokers’ industry experience into content to better serve our community. Together, we will continue to stand up for the ways in which we can transform the industry, from the inside out.