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Wednesday, March 2, 2016

Why Sellers Should Want Multiple Offers and How to Get Them

The bargaining power available to sellers increases dramatically when they get multiple offers on their home in the first days it is listed. But many sellers price their home so high that they are lucky to get one offer and, as a result, lose all their bargaining power.

What can you do with that bargaining power?  For sellers who need to buy a home but can’t do so without selling their current home, having multiple buyers allows them to negotiate post-closing occupancy.  Sellers know they’re going to have a hard time finding a replacement home, and if they have several offers they can usually convince one or more of the buyers to (a) match the highest offer and (b) agree to 30-60 days of free rent-back after closing so the seller can find and purchase a replacement home.
Buyers are becoming more and more desperate.  The chances are that if you get, say, 10 offers on your home, at least half those buyers have lost out on one or more previous offers.  If you tell one of those buyers, “You can have this house if you agree to this or that,” the buyer will probably agree to this or that, which can include, for example, agreeing to take the property “as is” or waive appraisal objection — or even to purchase that furniture that you were going to have to put on craigslist.
How do you get multiple offers?  Just price your house at or below what comparable homes have sold for. You cannot underprice a home in this market, you can only overprice it.  If you price your home slightly below market value, you will likely sell it for more (because of competitive bidding) than if you price it above market value.  This is not a hypothesis, but a statement of fact based on numerous successful transactions I have done in the past year or so.  Go ahead and price a home below what you’re willing to accept, because you can always reject an offer, if it doesn’t reach an acceptable level. If you think that’s a possibility, consider asking your listing agent to waive Sec. 7.3.2 of the listing agreement, which says you still owe a commission if you reject a full-price offer.  

Published March 3, 2016, in the YourHub section of the Denver Post and in four Jefferson County weekly newspapers.

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