Author: Heather Connor, Realtor
For a lot of buyers, you’re probably really curious about what actually happens during a multiple offer situation, particularly in Crested Butte, so let’s dive into it.
This is a really interesting question so let’s divide it into two parts. In this part, we’ll talk about what happens–the mechanics of it. Then, in part B, we’re going into what’s happening in the brain of the seller as they’re reviewing all of these offers.
Anticipate Multiple Offers in a Strong Seller’s Market
Anytime that it is a very strong seller’s market, it is now anticipated to have multiple offers. A resort community like Crested Butte is a little different than a primary community like Denver, San Diego, or similar places like that. The reason is that a multiple offer situation and a competitive offer situation for us might be three to five offers. Whereas in a larger city in primary markets, you might still be experiencing 10, 20, or 30-plus offers. It doesn’t make it any less competitive for those three-five buyers out there, but we see significantly fewer offers in general. That’s just the nature of our market.
Regardless of how many offers there are, the first thing that will happen is that in a market (like right now, when it’s a seller’s market), the listing agent will usually do one of 2 things. They will automatically post a deadline date and they make that note either available publicly under the MLS notes or they will make a note under private comments where only the agent can see that. Either case, you can either view or your agent will of course let you know when you have to submit that offer.
Make a Strong Offer… Inquire Further with Your Agent
Let’s talk about what happens when you’re making the offer. This means you have to write an offer and generally, you should be asking your agent “what should I offer? and “what should I do?” The main thing is that you should come in swinging for the fences on the price.
Often The winning Offer is the Over List Price
For those of you that are looking at the top of your price point, you may find that you’re going to get repeatedly beat out and that’s because you’re not able to get past 2-4% of the offer price depending on how much we’re seeing it go over the list. You might just find that you’re not even in a position to be competitive due to your financial constraints. Hopefully, you are already looking at properties that are already 10% to 20% of your maximum preferred budget, and then that way you can really swing for the fences when it comes to your offer price.
Determining Price and Other Factors that Matter
There are a lot of different ways you can handle the price: you can just put the price out there and escalation clauses are really popular. It can actually get really interesting when there is an escalation clause against another escalation clause. As well, the net amount of funds to the seller isn’t just about the price, there are other terms included such as who will pay, who will select and pay for the title insurance, and who will pay for other aspects like recording fees.
There are a lot of things like appraisal inspection surveys if you are purchasing land or a home. A lot of times, buyers tend to cover those costs but sometimes in a buyer’s market, they might actually make that cost the responsibility of the seller. So I hope none of you are doing things like that in your contract right now–you absolutely should be paying for the costs of things that you normally would pay for. There are other things too. As far as you know how taxes are pro-rated. You can do the most recent mill levy, you can do previous calendar taxes, those with rising values of properties can actually change how much is either credited or charged to each party, as well. Who plays for costing costs? There’s a lot of little things in the contract other than just the price.
While these other items still add up the main lever is still the price–of course, the biggest indicator is going to be the price.
Contingencies: To Waive or Not To Waive
The third thing to think about when you’re thinking about your offer is the contingencies when you are looking at dates and deadlines. There are areas where you get to put a date next to certain deadlines and you can actually choose to waive a lot of those. Of course, make sure you can actually waive it. For example, if you’re gaining a loan, you’ll have to get an appraisal. But, you can choose that you will actually cover any gap that might occur should the value not match up to your contract price. Again, There are a lot of little tools but you need to make sure that you’re in a position to actually waive some of those contingencies and not put yourself in a position we are not able to perform on the contract.
There are also other things like inspection deadlines–that’s a big one. You can choose to waive inspection but just make the note that you won’t really nitpick what’s in the inspection report. This is a little bit of a good faith comment because you could go under contract and have the inspection report state that you’re not going to nitpick. But then, what a seller believes is nitpicking versus what a buyer might believe is nitpicking might be in different thresholds so it’s a little bit of a leap of faith. But, it doesn’t hurt to put that intention out there.
If you’re comfortable, it may not hurt to actually waive inspection. I just want you to know that I’m not recommending that you do–there are definitely reasons that we have these contingencies in place to protect you as a buyer. However, there are things that should you choose, you can waive or become lenient–other things such as survey and other deadlines in the contract.
Even If You’re a Strong Buyer, A Weak Contract Can Hurt You
Like we mentioned, in a multiple offer scenario, you’re going to want to write the strongest contract that you can write (and you might hear me say this over and over) but you really want a full-time agent because you can be a buyer that offers amazing terms but your agent could write a sloppy contract that could harm you.
Text “Buyer Sample Contract” to 970.440.2975
Alright, so you look at a property, you like it, you make an offer, you find out it’s a multiple offer situation, you speak with your agent, you make an offer, you go full out on the highest price you can offer–the highest you can in an escalation clause, you waive any contingencies that you are comfortable with, and you make the terms as agreeable as possible for the seller. So what happens next?
PLOT TWIST! The Seller Can Ask for The Highest and Best Price
In the End, It is Still the Seller’s Sole Decision
Then finally what happens, in the end, is completely up to the seller which contract they want to accept. They can accept none, they can accept the highest in price, they can accept the one with the best terms even without the highest and best price–it’s completely up to them.