Real estate tip: Multiple offers

lauren and scottsponsored post by Lauren Hruby and Scott DeVouton

The Kansas City residential real estate market is hot.  A lot of people are looking buy, but inventory is extremely low. There are simply more buyers than sellers right now, making it a very competitive market. The best homes are selling quickly, usually within a few days of listing. Sale prices are up, with many offers coming in over asking price.

In this type of market, we are seeing a lot of “multiple offer” situations, which is simply when multiple buyers submit offers on the same home. Multiple offers are great for sellers, and can be very stressful for buyers. Both buyers and sellers should understand how a multiple offer situation arises and what issues are common.

When a home is in good condition and priced right in a seller’s market, it will be in high demand. If the home is listed in the area Multiple Listing Service – most are – it reaches every area real estate agent the second it’s listed. It also shows up on saved searches of buyers who’ve signed up to receive them. With inventory as low as it is now, there is an immediate high demand for most homes, and each buyer is on the clock.

On the day the home is listed, it will see many showings from morning through night. As buyers look at the home, each has to quickly determine if it fits their particular needs. On the same day, buyers need to determine if they want to make an offer on the home. If more than one buyer decides they want to make an offer to purchase the home, there is a multiple offer situation.

The thing to remember is that no multiple offer situation is the same. People deal with them in different ways, but it’s always the seller, or their real estate agent, who sets the initial stage. Sellers can just accept the best offer that comes in, they can ask for each buyer’s “highest and best” offer, they can counter one of the offers and leave the rest waiting, or they can counter one of the offers and reject the other offers outright. To add to the fun, each of these paths can have its own twists, turns and issues.

Confidentiality holds an interesting dynamic in multiple offer situations. According to the National Association of Realtors, a seller is under no obligation to keep offer terms confidential. This allows disclosure of each or any offer’s terms to any or all of the other buyers, in hopes of encouraging higher offers.

Practically speaking, we usually manage our seller clients’ multiple offer situations similarly, with the “highest and best” strategy. When we see that a house or condo is receiving offers from multiple buyers, we work with our client to determine an offer deadline. Once established, we notify each buyer’s agent that we will be accepting all the buyers’ highest and best offers, and that they must be received by a certain day and time. We also update the home’s public listing to note the highest and best deadline. At the deadline, we look at all the offers we’ve received and help the seller do a comparative analysis. Once the decision is made, we notify all the agents that their client’s offer was or wasn’t accepted.

For buyers, this can be a frustrating process. For each offer submitted, contract and disclosure documents must be signed, a financing letter must be prepared, and more than a little emotion is invested. Buyers’ negotiating power is reduced in a seller’s market like this, making things like home warranties, seller-paid closing costs, far away closing dates and bargain prices less likely. In multiple offer situations, just asking for things like this makes an offer less attractive, especially for bottom-line sellers.

We are also seeing buyers go to lengths only seen in the hottest of markets. Some buyers submit “as-is” offers, taking away the option to ask the seller to make repairs to the home as a condition of sale. Others agree to make up the difference if the appraisal does not meet the contract price, particularly if the contract is for above the listing price.

Buyers and sellers should both be ready for a fast and furious first day of listing for any home that comes on the market. Buyers, check out our Hot Market article HERE. Sellers, see what you need to do to help your home sell quickly and for a good price HERE. Both these links take you to the Midtown KC Post. Click HERE to take a look at homes in and around Kansas City via our easy QuickSearch.

The bottom line is to be prepared, and then prepare some more. Be flexible and ready to act quickly, whether you are making an offer or receiving multiple offers. Good luck this season.

Author’s Note – If you enjoy reading our Midtown KC Post articles, and might be buying or selling your own home, please contact us. We enjoy writing these, and love helping people.

Lauren Hruby Real Estate


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