How to Review Multiple Offers
I held an open house on Saturday at one of our short sale listings. It is a good listing: great price point, pristine condition, very close to the beach. There were over 80 people at the two-hour event. It was a frenzy of sorts.
Agents continued to call in all afternoon asking questions about how to write a good offer that would be accepted. And, this is definitely going to be one of those multiple offer situations.
When reviewing offers for short sales, there are a few things to look out for. People always think that price is very important, and it is. But, price is not the only thing that is going to get the short sale closed.
Here is a list of items when working with a seller and reviewing short sale offers:
- What is the purchase price? Is it at market value? Short sale lenders really like offers at market value.
- Does the buyer want a closing cost credit? Will the buyer be willing to purchase the property if the lender is not providing the closing cost credit? Note that certain short sale lenders may not approve closing costs credits on any sort of loan, not even FHA and VA.
- What kind of financing, if any, is the buyer obtaining? How large is the buyer’s down payment? How solid is the buyer? Note that certain properties and certain condominium complexes may not qualify for FHA financing, so it is important to check out the buyer’s financing before accepting the offer.
- Is the buyer paying cash? Often times cash buyers have money burning a hole in their pockets and may not be willing to stick around throughout the entire short sale process—especially if it is lengthy.
- How long is the buyer willing to wait for short sale approval? Obtaining short sale approval can take 2-4 months. Is the buyer willing to wait that long?
- Does the buyer want pest control, septic clearance, a home warranty or other perceived extras? Is the buyer going to continue if the bank declines to accept payment for these items? Investigating the answers to these questions will save you from a migraine later on in the short sale process.
Listing agents have a fiduciary obligation to their sellers to aid them in selection of the best offer to submit to the short sale lender.* And, the highest offer often may not be the best one. The best one may be slightly lower but have a financially solid buyer that is willing to stick around through thick and through thin. After all, who wants to negotiate the same deal twice?
*There are many agents throughout the United States who prefer to use a method whereby they submit multiple offers to the short sale lender(s). However, in my experience, even when one has open and honest communication with the short sale negotiator about the number of offers on the table, most short sale lender(s) still prefer to review one offer at a time.
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