In Hawaii real estate today, desirable properties frequently sell very quickly, for more than the asking price – and with multiple offers. In the present market it’s common for four to six offers to arrive simultaneously.
And only one buyer can be successful.
It’s an obvious challenge for buyers, but, believe it or not, it can be problematic for sellers as well.
IF YOU ARE A BUYER, what can you do to increase your chances of being the one selected?
- Make your highest and best offer FIRST. In multiple-offer situations, negotiating price simply doesn’t work.Decide at what figure you would absolutely, positively, not pay a single dollar more, and offer that amount.
If you are successful, you’ll have acquired the property at a price you decided beforehand you were willing to pay, and if you’re not, you’ll be able to let it go with less angst.
There’s nothing worse than losing out on a home you love when you’d have been willing to pay more!
- If you are an all-cash buyer, that’s great. While all-cash doesn’t usually beat out a higher offer that involves financing, it does give you an edge if other offers are equal or very close to yours.
- If that’s not possible, offer your highest available down payment. A larger down payment is enticing to sellers and adds strength to you offer.
- Before writing the offer, ask your Realtor to have a conversation with the seller’s agent. See if the seller wants special terms other than money that you can offer, but that others may not.
- Sincerity matters!
- Make sure your agent writes a strong cover letter telling about you, your family and your love for the property. (Don’t skip this – it can be the deciding factor!) Extra demands raise red flags for a seller and his agent. Make your offer as “CLEAN” as possible. That specifically means don’t write anything in the Special Terms section that is not absolutely essential. Avoid writing anything that might indicate to the seller that you are a “nitpicker” who would look for ways to renegotiate price or terms during the escrow process. Include the As-Is Addendum. It doesn’t take away any of your consumer rights, but it does make your offer more solid and definite.
- Remember that if you are successful, you will be subject to a binding contract. Despite everything mentioned above, in your eagerness to compete successfully, don’t write anything that you cannot, or will not be willing to perform!
- If you’re asked to be in “backup position,” meaning if something happens to the first place offer, yours will be accepted, there’s usually no reason to refuse. If you find another property, your backup can be cancelled at your own sole discretion, and you may have a chance to get your first choice after all.
IF YOU ARE A SELLER, multiple offers are a GOOD THING, but it’s still very important to make provisions for dealing with them in advance of the first showing.
- Decide if you will deal with offers as they come in or if you will review all offers on a specific date. Consult with your agent as to what’s best in your particular situation. (This information should be shared with agents showing your property.)
- Decide if you will authorize your agent to disclose to others if there are multiple offers. (Most of the time, you will want that information shared, but you are the one who must authorize it.)
- Allow yourself sufficient time to carefully consider all offers without being under undue pressure. (Your agent can write something such as “allow three days for review” in the listing.)
- You may decide to accept another offer(s) in backup position – in case your first place offer falls through. Discuss whether this is advisable with your agent. These are handled – accepted or countered – in the same manner as your first place offer, except that the words “Backup Position,” and other explanatory verbiage is inserted. (Usually it’s a good idea, but sometimes you may decide none of the others are acceptable and you’d rather start over from scratch if something happens to the first one.)
- Be prepared for unhappy buyers whose offers don’t succeed. Most of the time your agent will deal with “fallout” like that, but in the event someone reaches out to you, personally, it’s a good idea to have a script prepared. Something like: “We very much appreciated your well-considered offer, but we can only sell to one party and decided to accept another offer.” (Avoid saying anything offensive, especially the words, “another offer was better.”)