Housing markets have already picked up, which means more home buyers are likely to get off the sidelines. But, given the lack of good inventory in many real estate markets, there are more buyers than properties. The result is multiple offers.
Receiving multiple offers for your home is the best situation you can find yourself in when you go to sell. It puts the ball in your court and ensures that you’ll get the best possible price for your property and/or allows you to select the most reliable buyer to make certain that the deal will close.
There are many ways you can handle multiple offers. You can accept the “best” offer; you can inform all potential purchasers that other offers are “on the table”; you can “counter” one offer while putting the other offers to the side awaiting a decision on the counter-offer; or you can “counter” one offer and reject the others. However, at the core, these strategies can be reduced to two main approaches: individual negotiations and competitive bids.
With individual negotiations, you take each offer in the order in which it is received and work with each buyer to determine whether a satisfactory deal can be worked out. If not, you move on to the next offer. The benefits to this method are that you build camaraderie and rapport with potential buyers, which establishes good relationships for possible future deals (in cases where that is a possibility.) This is also the method that least risks falling apart at closing, because you have the most knowledge about the buyer before the deal is agreed upon, and you are free to dictate the terms of the deal so that the terms meet your specific needs. However, the lack of competition can sometimes lead to lower selling prices than you might see with a competitive bidding system.
Competitive bids have the potential to net the highest offer, but it’s also possible that this system leads to more buyer’s remorse and therefore more deals falling through before closing. The fairest way to take competitive bids is to do a sealed bidding system, where each potential buyer determines their best possible offer and places it in a sealed envelope. As the seller, you then open all of the envelopes at once and take the best offer. This method can be more frustrating for buyers because they get less feedback from you and less chance to adjust their offer; in essence, the buyers are negotiating against themselves. However, this could drive the price higher, as they are asked to come up with the price their gut feels is best.
Before you decide which method is best for you as a primary strategy, you have to take stock of your property and your specific moving situation. For example, is your house ready to move into, or does it need work? Do you need a specific closing date? Are you anxious to move through the process of closing quickly or could you adjust if a deal fell through? Your specific situation will dictate whether it is better to have a well-vetted buyer or a higher offer, and then you can make the decision whether to consider multiple offers individually or entertain competitive bidding.