I recently listed a property on the market and within a few hours of listing, we received four strong, full-price offers. My sellers found themselves in a good, albeit challenging, predicament: they had to decide which offer to choose.
Our scenario is not unusual in this market. Given our low supply of inventory and high demand from buyers, many sellers in our current market find themselves in this position. Not long ago, the Denver Business Journal highlighted the rash of bidding wars in their Real Estate Quarterly publication.
So the question is “how does a seller choose between multiple offers?” And the flipside question is “how does a buyer make their offer stand out?”
Here are my suggestions.
Ordinarily, the first and obvious answer is price. However, when a seller has more than one offer to consider, the buyer’s leverage on price and their negotiating power diminish instantly. The buyer often needs to offer at least – if not more than – asking price to even stay in contention, and it’s often surprising how similar competing offers can actually be when it comes to price.
So if the offers are relatively the same on price, and asking price or higher doesn’t necessarily mean an offer is strong, then what? If all things are equal on price, then the seller must look at other offer terms to help them narrow down the contenders. The variations in offers are often found in terms like down payment and financing, contingencies, and closing date. While these terms are always important to consider with any offer in any market, their strength may be enhanced in a competing offer situation where the attractiveness of any one of these terms has the potential to set one buyer apart from another. Therefore, the buyer must use these terms to present to the seller their most accurate and appealing offer possible.
Here's the bottom line.
Neither sellers nor buyers should rely on offer price alone as the benchmark indicator of offer strength. The other offer terms are just as important – and often more important – factors to consider when either submitting an offer as a buyer or choosing an offer as a seller.
Please let me know if you have any questions about the article or the market in general. And, as always, if you know of someone looking to get into the market, please feel free to pass along my name. I’m happy to help them if I can!
Renee Cohen is a Colorado Realtor with a passion for helping her clients find their dream homes in the challenging Denver market. She loves educating her clients about the market, advocating on their behalf, and helping them make informed decisions. Reputable. Reliable. Remarkable. Real Estate. Contact Renee to assist you with your real estate needs!