Wednesday, July 30, 2014
PLACERVILLE, CALIFORNIA
99 CENTS

Negotiating techniques in multiple offer situations

By
From page C2 | July 27, 2012 |

My clients had finally settled on a house. They had been previewing homes on the Internet for four months and in the last three weeks we previewed 30-plus homes scattered from El Dorado Hills to Camino. During this time we had seen some very nice homes and homes that met every specification my clients had told me they wanted. Still they postponed making a decision. At last, after previewing a modestly priced pool home in El Dorado Hills they told me this was the home they had waited for. Their search and thankfully mine was finally over.

Before writing an offer it’s always a good idea to check the current listing status and establish a dialog with the other agent that hopefully you’ll be working with. Prior to drafting the purchase contract, I called the listing agent to make a cursory check on the property’s availability or any recent changes to the listing.

“Hi Marlene, I have some clients thinking about writing an offer on your listing in Serrano. Just checking for an update.”

“E-mail it over,” she said. “I will put it with the other offers I already have for the seller to review.”

At any given time there are always a number of buyers seeking the exceptionally best-priced listing, in the most popular locations and in the best condition. Most listings are in average condition, in OK locations and priced at or slightly above their market value. When an exceptional property becomes available, buyers and their agents quickly recognize it.

An agent’s strategy instantly changes when preparing an offer for their clients when there is already one or more offers on the property. Without any other offers in the running, buyers have more flexibility in their negotiations. They may structure the offer at less than listed price or ask the seller to pay the majority of the closing costs. After all, what can it hurt to make an offer for less? The seller can always counter.

When there are other offers under consideration, buyers may only have one chance to catch the seller’s attention and end up with the property. Creating an offer that will stand out in a crowd of multiple offers is a challenge. Here are a few pointers.

Sellers make their decision to sell based on the bottom line and price is the single largest factor affecting their net proceeds. Although the offering price is important to the buyer, there are other subjective considerations that can increase the home’s value for some buyers. To paraphrase a statement by Plato: “Beauty is in the eye of the beholder.”

If acquiring the property at the lowest price is the single most important factor for the buyer, they should back off and not waste their time in a multiple offer situation. Multiple offers happen for a reason. A sincere buyer’s goal must be to acquire the property at a reasonable value. A home that is listed for $300,000 may actually be valued to some buyers well above the listing price. If a buyer isn’t prepared to bid at or above the listed price they shouldn’t bother.

An offer cluttered with excessive contingencies, conditions and seller concessions will be less attractive to a seller. Buyers normally have 17 days to inspect a property and 30 days should be sufficient to satisfy an appraisal contingency. Asking for additional time indicates that the buyer may not be confident in their decision or not qualified.

Without any offers on a property I might suggest a $3,000 earnest money deposit on a $300,000 selling price. When in competition with other offers I will double that. Most buyers mistakenly believe their earnest money deposit is subject to forfeiture if anything goes wrong. It’s highly unusual for a buyer to forfeit their deposit. Standards of practice and case law favor buyers when the status of their deposit is in question. Many sellers, however, mistakenly equate the amount of the deposit to a buyer’s qualification and commitment.

After discovering the seller is considering more than one offer, a second phone call to the listing agent may provide a competitive edge.

“Hi Marlene, this is Ken again. My clients really like your listing and I know that you have other offers. Besides price, what is really important to your clients? Perhaps I can save us both time and structure a contract that will work for all parties.”

The listing agent may share with me valuable information regarding the seller’s preferences that I may be able to incorporate into my initial offer. I am often pleasantly surprised when asking the question, “What will it take to have my client’s offer accepted?”

The more comfortable the listing agent and seller feel about the buyer being able to close escrow, the better the odds of getting an acceptance. Although the purchase contract calls for the buyer to provide a pre-approval letter within seven days of a seller’s acceptance, that’s too late in the game when competing against other offers. Pre-approval letters and other documentation attesting to the buyer’s qualifications or interest should always be submitted along with the offer.

With half the number of homes for sale this year over last, multiple offers are the new standard. Homebuyers will need prepare for tough competition when making offers. They should not be intimidated. They will need to examine their motivation and aggressively move forward if they want to own an exceptionally good property.

Ken Calhoon is a real estate broker in El Dorado County. He can be reached through his Website at kencalhoon.com.

Comments

comments

.

News

Sand Fire nears containment: 66 structures destroyed

By Cole Mayer | From Page: A1 | Gallery

 
District 2 candidate statements tell of goals

By Dawn Hodson | From Page: A1

 
Schedule for Highway 50 blasting closures

By News Release | From Page: A3

Tails wagging over dog park approval

By Julie Samrick | From Page: A3

 
Quarter-acre fire in Kelsey

By Rebecca Murphy | From Page: A3

.

Opinion

My Turn: Privatization of public services

By Mark Belden | From Page: A4

 
Policy book

By Mountain Democrat | From Page: A4

 
.

Letters

GDPUD management report

By Letters to the Editor | From Page: A5

 
District 2 supervisorial special election

By Letters to the Editor | From Page: A5, 3 Comments

Piano replaced

By Letters to the Editor | From Page: A5

 
Comments sign-in policy

By Letters to the Editor | From Page: A5, 1 Comment

Save the Guinea Worm

By Letters to the Editor | From Page: A5, 1 Comment

 
Large bangs

By Letters to the Editor | From Page: A5, 2 Comments

Private property gets no respect

By Letters to the Editor | From Page: A5, 1 Comment

 
.

Sports

Ex-Bruin lends a helping hand

By Steven Shaff | From Page: A8 | Gallery

 
Sierra Sharks finish middle of the pack

By Democrat Staff | From Page: A8

Roundup: July 29, 2014

By Democrat Staff | From Page: A8

 
Taz pull through for SSL trophy

By Patty Pope | From Page: A8

.

Prospecting

Nuns discover a pleasant place

By Lexi Boeger | From Page: B1 | Gallery

 
Bargains can be found everywhere

By Democrat Staff | From Page: B2 | Gallery

At a glance: Game time

By Mimi Escabar | From Page: B2

 
Barbecue dinner to benefit Blue Star Moms

By Mount Aukum Winery | From Page: B2

Stroke and osteoporosis screenings planned

By Life Line Screening | From Page: B3

 
Stagecoach story takes riders on a trip

By Wendy Schultz | From Page: B3

Help needed to make cool ties

By Sew 4 | From Page: B3

 
Gold Rush Days activities cancelled this year

By Sacramento Convention And Visitors Center | From Page: B4

Master Food Preservers: Tomato time

By Monique Wilber | From Page: B4

 
Build an author platform at the Library

By El Dorado | From Page: B5

 
Sacramento area museums offer summer fun

By Sacramento Association Of Museums | From Page: B5

.

Essentials

Weather stats 7-29-14

By Michael Raffety | From Page: A2

 
Building permits 6/2-6/2014

By Michael Raffety | From Page: A2Comments are off for this post

Crime Log: July 17

By Cole Mayer | From Page: A2

 
.

Obituaries

Merlyn Wilbur Adams

By Contributor | From Page: A2

 
Lisa Oliver Rose

By Contributor | From Page: A2

Wallace Murrel Thomas

By Contributor | From Page: A2

 
.

Real Estate

.

Comics

.

Women’s Health

Love the skin you’re in

By Noel Stack | From Page: WH4

Dump stress and improve your health, productivity

By Wendy Schultz | From Page: WH7Comments are off for this post

Women’s Health Expo

By Marshall Medical | From Page: WH8

Find the confidence you need to fight back

By Special to the Democrat | From Page: WH12

Our choices directly affect our health

By Special to the Democrat | From Page: WH14

They’re NOT your mother’s hearing devices!

By Marshall Medical | From Page: WH17