“U.S. Home Prices Rise at Fastest Pace in 15 Years,” The Wall Street Journal
“There are more agents than homes for sale,” The Real Deal
“’We Need To Build More Homes’: Prices Soar Amid Housing Shortage,” NPR
It seems as if every day brings a different news headline, but the messaging is the same. The real estate market is on fire as people continue to flock to the suburbs and reposition their families due to impacts from COVID-19. The spring housing market in northern New Jersey is no exception with multiple bids for homes on offer and listings that disappear within days.
If you are thinking of buying or selling a home, it is more important than ever to have an experienced real estate agent in your corner. If a home seller receives multiple offers, a skilled agent can help highlight the offers that shine through the pack. And, as a potential home buyer in a multiple bid situation, an experienced agent can advocate for you and help move your offer front and center.
As the busy spring real estate market continues apace, here are 5 factors a home seller considers when there are multiple offers:
1. Home sellers will compare an initial buyer offer and final offer
When multiple bids are on the table, a home seller starts by looking at initial offers and the trajectory of the offers over time. An experienced real estate agent that is working with the home seller will create a spreadsheet that shows all of the initial offers as well as the change in those offers. If there are many bids, the agent will request a best and final offer from all bidders for consideration. Potential buyers that show a clear intent to purchase and a pattern of rising offers will stand out compared to other buyers.
2. When there are multiple bids, the amount of the deposit or down payment can be determining factors
A deposit is a commitment to the seller, and the amount of the deposit potential buyers are willing to put forth towards a home can make a difference. If the sale does not proceed without cause, the home seller keeps the deposit. Also, the higher the deposit, the more committed the buyers and the less risk taken by the lender.
A down payment is a commitment to the lender. A larger down payment speaks volumes to lenders showing a greater likelihood that the home’s mortgage will be paid off successfully, and thus sometimes a lender is more likely to approve a mortgage. In the end, the deposit or down payment amounts can provide a clearer path to closing for both buyer and seller.
3. Home sellers can be motivated by an accelerated closing date
From the time a home offer is accepted until closing—when paperwork is signed and the sale is official—the home sale process can last 30 to 60 days. Depending on the complexity of the mortgage, a buyer may take time to gather paperwork; however, home sellers are often eager to close.
In many cases, a home seller can be motivated by an early closing date. For instance, if the home seller has a job lined up in a new town, is in the midst of a divorce, or already has a new home, an early closing mitigates the need to make payments on two mortgages.
4. Creative inclusions can sway a home buyer
Home sellers may offer other items that would normally be considered exclusions–personal property not attached to the house—to attract buyers and speed up negotiations. For example, a seller may agree to include outdoor furniture, window treatments, or a children’s playset. The National Association of Realtors’ Highlights From the Profile of Home Buyers and Sellers found that 46 percent of sellers offered these kinds of incentives to close a deal more quickly. Creative exclusions can sometimes entice a buyer to step up and get an offer agreed.
5. A willingness to take the property “as-is” can help a home offer stand out
A buyer who is willing to take the home “as-is” will not negotiate repairs flagged in an inspection. An “as-is” offer may be more appealing to a seller looking to close quickly or who does not have the cash flow to handle repairs. Problems that unfold post the sale of the home are not the responsibility of the seller. Another slight variation to this option is if the buyer is willing to take a credit on the sale price and organize the repairs. The home seller does not have to lay out immediate cash for costly repairs nor hold up the closing while the repairs are underway. The willingness of a buyer to take a property “as-is” is a powerful incentive for home sellers when comparing multiple offers.
It’s clear that current real estate market conditions are unprecedented. They present unique challenges for both home buyers and home sellers, and understanding how to negotiate the market successfully requires skill and experience. As a real estate agent of 23 years, I would love to be your advocate and assist you with your home buying or selling needs. Contact Victoria Carter at (973) 220-3050 or email firstname.lastname@example.org.