How Can Sellers Gain the Most from a Bidding War?

You have this great property for sale, and it’s just generated multiple offers. Do you know all the things you can do to get the best offer and maximize your gain?

As the number of properties selling over asking price continues to rise on Oahu, more and more buyers are using creative tactics to make their offers stand out from the competition. Who’s to say that sellers can't use some of the same tactics?

The ideas I'm about to share with you work best when your property has generated multiple competing offers - what some refer to as a bidding war, however, using these tactics when not in a bidding war will likely turn off buyers. So work with your real estate agent to determine the best approach for your situation.

Here are some ideas for countering multiple buyers' offers:

1. Counter more than one offer on price. Write into the terms that if more than one buyer accepts your counter price, you have the option to choose which offer to accept as the primary offer. Other offers may be accepted as 'backup' offers.
2. Ask for a higher initial deposit and/or a higher additional deposit credited to escrow a short time after the inspection approval. This shows strong commitment.
3. Ask for a non-refundable deposit due after most of the buyer's due diligence is completed. If the buyer cancels for any reason after the deposit, the seller retains this money. The buyer's willingness to do this confirms their commitment to your property.
4. Ask the buyer to pay for customary seller costs such as the termite inspection fee, condo doc charges, etc.
5. Ask the buyer to delete some of their requests such as cleaning, pet treatment, etc.
6. Shorten contingency periods and closing date. Shorter time frames reveal problems sooner rather than later, so you can resolve them or move on with a different buyer. Make sure the lender can accommodate an earlier close.
7. Market prices are going up and comparable sales may not yet reflect the market increase and could result in your property appraisal being less than the purchase amount agreed upon between you and the buyer. To prevent this, get the buyer's commitment up front on how to handle the situation if comparables and the appraisal are lower than your asking price. A motivated buyer may be willing to make up the difference between the appraised value and sales price.
8. Ask that the buyers be pre-approved for their loan with all their documents and credit report already reviewed. Ask for proof of the buyer's cash funds, as part of their acceptance of your counter offer and consider shortening the loan approval period.

In this market, competing offers are more and more common, and as a seller, you’re in a strong position to get the best offer possible, in both price and terms.

I use a number of other tactics to help my clients increase the number and quality of competing offers they get for their property. In a bidding war, our ability to be creative with counter offers gets you the strongest accepted offer. I would be happy to help you negotiate your sale using these and other creative tactics. Please feel free to contact me if there is anything that I can do to help you with your property needs.

Chris Yozamp (R)

 
Cell:  (808) 781-1227
Direct:  (808) 738-3176
Fax:  (808) 738-8676
Email: chris.yozamp@pruhawaii.com