Congratulations! You successfully completed your flip and now ready to market your property! It’s a hot property, in an even hotter area. The listing goes live and within 24 hours you have multiple offers flowing in with promises of more. No, this isn’t a dream, and there is no need to pinch yourself. You’ve got more work to do and here is where it get’s really interesting. Things can become quickly convoluted when dealing with a multiple offer situation. Here’s some suggestions that has worked for us in our business:
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Tips for Selling a Hot Property
WAIT! …before you begin to respond. If you have a desirable property and know that you are more than likely going to get multiple offers, let prospective buyers know that no decision will be made for 24-48 hours. We like to list on a Thursday so it’s nice and fresh for the weekend. If it’s a hot property, we let agents know that a decision will be made Monday morning. I suggest that they submit their highest and best by Monday morning at 9:00 am, and that a decision will be made by noon. They will respect you for communicating and will also understand that you are simply trying to ensure you have the best offer for the property.
ANALYZE! …the offers completely. The highest offer is not necessarily the best. Check out their financing. Pay attention to things such as option periods, close dates, and if they are asking for any concessions towards closing costs. Remember, every item affects your bottom line, even TIME. If you have your property financed the closing date is very important. Not only are you carrying the property with taxes, utilities, & insurance, but also with interest. We’ve had agents submit a full price offer and then ask for the moon between closing costs, surveys, residential service contracts and closing cost concessions. Oftentimes the “sales price” is our full asking price, but they are in essence asking us to discount the property $10,000. Then the conversation that I dread follows… When we come back and adjust the sales price to compensate, I always have to explain to the agents that although they did offer full asking price, the sellers bottom line is $10k lower. Every property and situation is different, so scrutinize every offer!
COMMUNICATE! …clearly and straightforward! Whoever is fielding the offers and phone calls must be able to communicate effectively with prospective buyers/agents for your stellar property. Many people hear only what they want to hear. That is why our company created guidelines for submitting offers that we upload to the MLS for every listing. This way I can point agents to that document. It answers many of their questions and frankly it’s something we look for when receiving offers. We know immediately whether or not they’ve read it and paid attention simply by what title company they have listed on the offer. This important step will eliminate many distractions with extra phone calls and questions so you can focus on the offers at hand!
Tips for Making Offers on a Hot Property
MOTIVATED SELLER: Let’s take a look at a situation where you find yourself as the buyer. You may either be making an offer on a property that is priced aggressively on the open market or a property where the homeowner has contacted several investors. The best piece of advice I can give you is cleanliness! Keep it simple. Again, it’s not necessarily the highest bid that will win out. Find out what the homeowner is desiring for a close date. Offer flexible terms, perhaps a lease back if necessary. Consider including in your offer the option for the homeowner to leave behind any trash or unwanted items,working that cost in your offer price. Most of the time a motivated seller will exchange convenience for money, so try to dig and find out what are the needs of the seller. Many times these items are what will attract the homeowner to your offer and you will find yourself with an accepted offer.
REO: If you are making an offer on an REO or short-sale, I can not stress enough the importance of reading all instructions. Most, if not all, listings that are foreclosures or short-sales will have detailed instructions on how to submit an offer. To even be considered as a buyer, you must follow the guidelines. I welcome REO listing agents for their input on getting offers on bank-owned properties.
SHORT-SALE: Submitting a cash offer on a short-sale with a two-week close does not necessarily make your offer more attractive. Short-sales can take up to 30 days just to get your offer looked at. Many times banks do not care how quickly you can close. Submitting a realistic, clean offer is the way to go in this case. Also, let the listing agent know that you are patient and understand that the process can be lengthy. The seller’s agent, is above all, who you need to make comfortable with choosing you as the buyer-at-hand!
Multiple offer situations are exciting and can be a little stressful. But with a well thought out plan you can handle any situation with confidence!