5 Jun 2012
Multiple Offers Increasing in ME
Henry James once said……To read between the lines was easier than to follow the text. How true! Especially when trying to understand the motives of buyers and sellers.
As we have been reporting for several months, the number of homes being sold this year is up compared to 2011. What is more surprising, however, is that multiple offer situations are occurring. During the last 60 days we have been involved in five such cases – two in Falmouth, two in Portland and one in Cape Elizabeth. Clearly this is a signal of improving conditions.
For those not familiar with the term, a “multiple offer” it is just what the name implies – there is more than one buyer attempting to purchase the same a home at the same time.
For those of us who can remember, back in 2005 this was a very common 0ccurrence. Interestingly, this happens not only for homes that are new to the market, but also to homes that have been for sale for a long time.
The important point we want to convey is that a multiple offer situation can happen at any time and will present additional challenges to both the buyer and seller. Additionally, these transactions can be much more stressful and complex so strategy is extremely important.
As a buyer, not only do you have to negotiate with the seller, but you also have another buyer to be concerned about. As a seller, while most dream of having multiple bidders for their home, it isn’t always as great as it appears. Buyers are often very uncomfortable being in a competitive bidding situation – and it is very possible that you could alienate all of your buyers and end up with none. During these situations emotions tend to run higher than normal.
In a multiple offer situation, the price is usually the biggest factor the seller will consider. Added to this are some old-school techniques that buyers frequently use to put pressure on the seller to accept their offer as soon as possible. A better approach, however, is to find common ground for both the buyer and seller that results in a win-win outcome. Some things we have found successful include:
Gain insight into the seller’s motivation and moving logistics. For example, are they moving to a new home that is not yet ready and therefore require a short term rental? Most sellers do not want to move twice.
Reducing the inspection period and removing contingencies from the contract quickly makes an offer much more valuable. It demonstrates to the seller a willingness to get your due diligence done quickly and efficiently.
Is there any personal property that is large or difficult to move that would create a huge cost factor for the seller? An offer to keep, purchase or dispose of personal property can be an interesting incentive.
Offer to keep service providers employed when you take possession. For example keeping gardeners, a pool service person, a pet sitter, pest control, etc. might be both a good from a cost point-of-view, but been viewed as a gesture to help maintain long-term relationships. it may help prevent any cancellation clauses that might be in place.
Although is might sound trite, writing a letter about why you would love to live in the house sometimes makes a very positive impression. Remembering that most people are emotionally invested in their home and often care about who owns it after them is more important than you might think.
In the end, a straight-forward hones approach works best and build trust. This is especially true when the offers are very similar and its the small things that make a difference.