DIY is all the rage right now and it’s also true when it comes to selling a house. More and more people are choosing to go at it alone instead of paying high real estate commissions, but truth be told, selling a home yourself is never as easy as it looks. Based on a Zillow survey, of the 70% of sellers that started the For Sale by Owner (FSBO) process were unsuccessful and ended up hiring an agent or abandoning the effort altogether. While there are articles, how-to's and videos about selling For Sale by Owner it is still proving to be a daunting task.
On top of all this 92% of all home sellers don’t even try to sell on their own and begrudgingly pay more than they think they should to an agent. Why do they do this? Because they are afraid to handle the critical elements of negotiations, purchase contracts, required legal disclosures, contract disputes and the details of coordinating escrow and title, and rightly so. Thankfully we have come up with an alternative.
Before continuing here, we suggest reading up on our previous blog – What Happens Next After Putting Your Home For Sale on Zillow to help you begin selling your home on your own.
When it comes to selling your home, the dream scenario is to get multiple offers from buyers competing with each other to raise the price. In a hot seller’s market, it is not unusual to receive 10 or more offers for your home. According to the National Association of Realtor’s, you are more likely to accept an offer within the first two weeks of listing your home for sale than any other period. Knowing this, before you list your house for sale, you should be prepared to process multiple offers, discern the difference between them, and to leverage those offers to get the highest price while navigating the terms and legalese of an 18 page purchase contract to get the best terms.
Here are a few tips to help you juggle the offer coming in:
Compare the Offers
Organize the offers from the buyers in a way that makes it easy for you to see what each one includes so you can easily and efficiently weigh the pros and cons.
Salient points to compare are:
- Purchase price
- Close date
- Commission to agent
- Earnest money deposit
- Down Payment
- Contingency removal timelines
- Proof of funds for downpayment and closingWho pays for what services (escrow, title, home warranty, inspections, retrofit, etc)
- Change of possession terms
It is important to prioritize offers that are preapproved for a loan, will give you ample time to move, can be flexible and have few or no contingencies at all.
Tip: Most buyers do not open with their very best offer, and typically leave room for negotiation, so do not eliminate buyers based on the initial offer price alone. Counter all offers in writing with what you will do, versus what you won’t do.
The Highest Offer Isn’t Always the Best Offer
While it’s usually a priority for sellers to make as much money as they can on the sale of their home, it’s not necessarily the top priority for every seller. A high offer means nothing if the buyer can’t follow through on it. You want to evaluate the offers based on the likelihood that it will close.
The best offer is the one that will meet your needs as the seller. Is your goal to close fast? Be able to rent back the home for a few weeks? Are you worried about having to make repairs or the house not appraising? Sometimes an offer addressing items that are important to you (other than price) could be preferred over the highest offer.
Tip: If one offer is significantly higher than an offer with better terms. you can counter the highest offer with the better terms and counter the offer with better terms with a higher price to see if you can get one of them to give you the best of both offers before deciding on the right offer for you.
Get Ready For A Bidding War
The big difference between responding to a single offer versus multiple offers is the form.
In a single offer scenario, a buyer makes an offer and the seller can accept, reject or counter. Assuming the seller counters, the buyer now has the option to accept, reject or counter and this process continues back and forth until the parties agree or one of the parties quits.
This does not work in a multiple offer situation. If you have three offers and you counter all of them and all three buyers accept, who are you in escrow with? You can’t sell the house to all of them.
When negotiating with a single buyer, we use the Seller Counter Offer form. When negotiating with multiple buyers, we use the Seller Multiple Counter Offer form. This form specifically discloses to the buyer that you have multiple offers and even if they accept your counter offer terms, you are not in escrow until you confirm acceptance of their offer over the others. There are a lot of nuances involved in a complex multiple counter offer negotiation that maximizes price and gets preferred terms, but the use of the right for and the right language in the offers protects you from accepting any offer until you have fully explored all offers to find the right one for your situation.
Tip: If you have one low offer and one high offer, you want to do the multiple counter offer process to get the higher offer to go even higher. Use the low offer (you do not have to disclose the offer amount) to create fear of loss in the good offer and use that leverage to get an even higher price.
Do not trust the buyer’s agent to represent you (maybe)
The buyer agents job is to represent the buyer. That means putting the buyer’s needs ahead of the seller’s. They have an obligation to deal with you fairly, but that does not mean get you the best price or terms. Just because you pay the buyer’s agent a commission doesn’t mean he or she represents you. Trusting the buyer’s agent to represent you as the seller is like going to court without a lawyer and letting the opposing counsel represent you. It is just a bad idea.
Tip: Use our Seller Representation service to full service, professional representation for every aspect of your transaction including negotiations, purchase contracts, legal disclosures, contingency removals, request for repairs, and coordination of escrow and title for a low set fee of $2950 payable at closing! if you do not close, you owe us nothing.
Getting multiple offers on your home is exciting, but it can also be overwhelming if you are trying to figure it out along the way.
Follow these steps and you will get the best price and terms to lower your stress, reduce your risk, and maximize the asset value of your home!
Learn more about Everhome’s exclusive Listed With Owner program here.