Kelly Koselek

Multiple Offers


In today’s current environment, it is highly likely that you will be involved in at least one multiple offer situation. There are some definite do’s and don’ts that knowing these will help you become a winner in these situations.

Process of actually presenting the offer in a multiple offer situation:

The agents present their offer one at a time in person or by fax/email. The Sellers and Sellers' agent know the contents of each of the offers, but the Buyer’s agents do not. It is a TREB rule that each offer is confidential and is not to be shared.

In many cases – it is a one and done. We present our best offer and they will pick the one they like best. About 2/3 of the time, the Seller's agent calls us all in and tells us the offers were close - go back to your Buyers to see if they will improve the offer and come back in 30-45 minutes. Sometimes the offers are legitimately close, but sometimes they are not - it is just the 'greed factor' kicking in. In almost every multiple offer situation that I have been in - there is usually 1 or 2 who do not come back. This is always a risk for the Sellers - since we don't know what the others have bid - the highest offer may not come back.

We then each present the new offer to the Sellers and the Seller's agent, still not knowing what the others have bid. In fact we never find out what the others have bid, except for the one that got the house. (Lousy system!)

What wins the house? The highest offer, bank draft for the deposit in hand for at least 5%, with the fewest conditions. If you can come in with what we call a 'clean offer' - not conditional upon financing, home inspection or anything else and have the highest price - you will usually get the house. If there are 2 offers - one with a condition, and the second that is $5000 – 10,000 less but no conditions - they will often go with the lower offer. They want the guaranteed sale.

How to eliminate the Home inspection condition - either have someone you know who is very good with houses and the mechanical systems come through the house and check it out, or pay to have a Home Inspection done prior to submitting the offer. Many people do this before they put in the offer, however, it will cost you about $4-500.00. Fine if you get the house, but $400 down the drain if you don't. Every house will have some problems - the Home Inspection report will let us know whether they will be $100's to fix, $1000's or $10’s of thousands. I always recommend that you have a home inspection done or put in the condition with every offer (multiple or not) even if it means risking losing the deal, if you cannot do it ahead of time. It is not worth the risk of buying a house with severe 'hidden' problems.

How much to go in at? My job is to give you all of the information possible on what similar houses in the area have recently sold for - your job is to make the decision. Everyone has their own ‘ceiling’. Try to think of it as – “At what price, if it sold for $1000 more than my offer, would I be OK with? “ It is like assessing risk in investments – each of us has our own risk tolerance.

With multiple offers you have 2 extremes and most of the people fall in between these – on the lower end - some people are always looking to get a deal and will go in below list price. There are no deals in multiples, this type of person is unlikely to ever get a house in a multiple offer situation. The other extreme is the person who has lost a few bids, plans on living in the house until he dies, and decides that ‘He wants this house’ and doesn’t care if he overpays by 5-10%. Most of us cannot or will not compete with that person. Decide where you fit in and choose your number. I will do my best to present you and your offer in the best light, but ‘in general’ – the Sellers are mainly concerned with price, close date and a clean offer – just as you would in the same circumstance.

However, you never know. Ask me about the time that my clients were the number 2 bidders and we got the property. While not common - it can happen.

 

KELLY KOSELEK, BSc, M.B.A. Bus. 416-489-2121 Cell:647-273-7597
Royal LePage Real Estate Services Ltd, JOHNSTON & DANIEL DIVISION, Brokerage