How do Home Seller’s Handle Multiple Offers?
MAY 9, 2018 BY MICHELLE GIBSON, REALTOR®
Every home seller will handle multiple offer situations differently and it’s important for home buyers to understand prior to submitting an offer what can happen if the seller does receive more than one offer. Below are 4 different ways a home seller may handle a multiple offer situation.
Request Highest and Best
Many home sellers will request “highest and best” from every buyer who submits an offer on their home. So what does it mean when the seller requests “highest and best”? Basically the seller is giving every buyer an opportunity to change their offer and submit their best offer by a certain day and time. A highest and best offer should contain the buyers highest purchase price they’re willing to pay, highest escrow amount they’re willing to put down, least amount of contingencies, shortest contingency periods and best closing date. It’s important for home buyer’s to understand when they are instructed to submit their highest and best it’s their only opportunity to change their offer. They should not expect the seller to counter their offer, think the seller will wait around past the deadline for their offer or that a full price will “win.” It’s not uncommon for other home buyers to offer well above list price in the tune of 1%10% in a multiple offer situation because they really want the home, so offering $1 above list price might not cut it.
Counter One Offer
Not all sellers will disclose they have received multiple offers especially if one offer in particular stands out. So instead of requesting highest and best some sellers may choose to counter one offer and see if they can come to terms. Now a lot of home buyers don’t understand why a seller wouldn’t notify all parties that they received multiple offers and give them the opportunity to change their offer. However in my experience some sellers don’t want to risk losing an offer that has the potential to be perfect for an offer that may never come if they were to request highest and best.
Typically when a seller decides to counter one offer it’s
because there are only a few terms they’d like to change,
such as price or close date, so they’ll counter. When
countering a single offer the seller may disclose to the
buyer they received multiple offers, but are choosing to
work with them first in hopes they’ll agree to the changes.
Some buyers will jump at the opportunity to avoid a
bidding war and accept the sellers counter, but others
won’t. If the first offer doesn’t pan out the seller may elect
to counter a second offer and avoid requesting highest
and best all together, not every seller wants to go the highest and best route.
Accept an Offer
With multiple offers being common place in many parts of the country some home buyers will submit their “highest and best” offer from the start in an attempt to get the house and avoid a bidding war. Sometimes this tactic works; the seller will accept the offer as written and not entertain or view any of the other offers. Both parties usually look at it as a win win, but when this happens it tends to leave the other buyers who submitted an offer extremely disappointed that they didn’t get a chance to negotiate or change their offer.
It’s rare, but sometimes a seller may choose to do absolutely nothing. I’ve only encountered this situation once, the seller didn’t feel they had to do anything and assumed if a buyer really wanted their home they’d chase them. This definitely isn’t the norm, but in this case the buyer whose offer was accepted did chase them because they really wanted the house.
Home buyers need to understand the real estate market and what they can expect. If they’re in a hot market where homes are receiving multiple offers they’ll probably want to submit their highest and best offer from the start. This is where working with a top Realtor who specializes in the area can greatly benefit a buyer because their agent will not only be able to guide them through the process, but also educate them along the way.