For Sale by Owner News and Articles
By Robert Irwin
If you are in the enviable position of having more than one buyer competing to purchase your home, the question arises, how should you handle the multiple offers?
HANDLING MORE THAN ONE OFFER
First and foremost, don't do anything to jeopardize all of the offers - don't somehow turn all the buyers away and end up with nothing. On the other hand, do get the best price from the strongest buyer.
As a seller, it's important that you allow buyers to present their offers to you as soon as possible. Do not tell a buyer you won't look at his offer until you finish considering an earlier offer that you have on the table. While that might seem the polite thing to do, it makes no business sense.
In fact, doing the opposite is to your advantage. If you can get a buyer to make an offer with a time extension on it for a few days, you can hang onto that offer while hoping better offers come in. Then you can either accept the best offer or counter one or all of them for more money or better terms. (You can counter for even more money than your asking price!)
As the seller, you are in the driver's seat. And, if you can get a couple of buyers eager to purchase your home, you might even be able to start a bidding war where they compete against each other with ever higher offers. (Don't count on it, but it has been happening in some areas.)
HOW TO COMPARE MULTIPLE OFFERS
It would be a mistake to simply look at the price on two offers and blindly accept the highest. The quality of the buyer and the terms of the offer are also very important.
Today, any buyer worth his salt will present you with a pre-approval letter presumably telling you that he's already qualified to get financing. Look at that letter closely:
Make sure it's from a lender, or at least a mortgage broker representing a specific lender.
Does it say the buyer has been preapproved on the basis of a credit report and credit score?
Have there been verifications of deposits (showing cash on hand for the down payment) and employment (showing he has the job claimed)?
Is the lender ready to commit to funding on the basis of income to expense ratios? Or is the letter simply an opinion based on nothing more than a conversation with a broker?
A good pre-approval letter may not commit to funding, but it will commit the lender to the buyer saying that this person has qualified for the needed mortgage, short of a change in his existing credit status at the time of closing. It's something you can almost take to the bank.
At the same price, or even at different prices, a buyer with a solid preapproval letter may be a better choice than one with a weaker letter... or none at all.
Also, be sure you understand the terms of the offer. If you want to move immediately and one buyer offers a 21 day escrow while another a 60 day escrow, you might seriously consider accepting the shorter escrow... even if the price isn't as high.
Don't get greedy. Just because you have more than one offer, doesn't mean that all, or even any, are good. Read them carefully... and be careful.
Robert Irwin is the most prolific real estate writer in America having produced over 100 published books in the field. His TIPS & TRAPS McGraw-Hill series has sold well over a million copies and his FOR SALE BY OWNER KIT and FIND IT, BUY IT, FIX IT and other books have been strong sellers for Dearborn.
In addition Irwin writes a regular real estate column for The Wall Street Journal online and is introducing a new weekly column forOwners.com.
Irwin has sold his own property "by owner" and during over 30 years in the business has been a broker and consultant to lenders, agents, buyers and sellers.
He can be reached through his website RobertIrwin.com.