August 22nd, 2010
…..continues from Part I.
As you may recall from Part I, the Real Estate Salesperson/Branch Manager is calling at the home of the seller at 7pm ready to present 3 buyer offers, all in sealed envelopes.
We find 3 offers from 3 different buyers who each want to own a house in the sunshine capital of New Zealand, Nelson, where the weather map looks pretty much like the one above every day 😉
They sit down at the dining room table and open them, in turn looking at the $$$ offered, the deposit, the possession date, and most importantly the conditions………
A] do they need to sell their existing property first (is it even on the market yet?)
B] do they need 3-5 days to get a builders report / engineers analysis / finance approval?
C] do they require a LIM / long / short / unfavourable possession date
D] are they being cheeky with no / very small deposit / trying on silly clauses
E] do any of these offer us an unconditional sale tonight, right now, here on the spot, SOLD?
…..once all three offers have been opened and they are laid out on the table…..
……its decision time.
All have come in around the right dollar figure for the clients expectations of what they wanted to achieve, the possession dates for two are ok, one is out an extra 4 weeks.
One needs so many days for bank approval of the finance, along with the final check of the form & title from a solicitor or a conveyancing specialist.
Lets look at number two…..
there’s not much missing from this one, certainly the buyers wanted to be certain this was the right one for them, and like many today did not want to commit to any expense until they were sure in their words “they won the deal.”
The point here is that up against the others, a seller may not feel confident that these people are as serious as the other agreements he/she is looking at tonight.
In other words up against other offers, the sellers signature on this agreement does not offer the certainty that, for example the next one does. His/her signature on the next one usually indicates its SOLD the moment its signed, tonight.
……..the third offer…..
Which one would you pick? (the above examples are obviously from different occasions ♣)
If you are being frank with yourself its quite obvious that with the clean one the property is SOLD on the spot tonight, whilst the other agreements have differing time-frames that would mean you, as the seller, will need to wait. Believe you me, if there is one time that waiting can seem like its in extra slow motion, then house sale negotiations will make it do that.
The situation is more compounded if the seller is in-experienced with the multi-offer situation, and went with the higher $447,750 offer with 5 days bank finance approval required while saying no to the $444,500 offer that was unconditional, only to find out 5 days later the finance was turned down and they have only been approved to $430,000. Then they discover the other party has since found another home they like just as much.
Many have experienced the situation in a multi-offer where a buyer seriously over extends themselves to get into that perceived winning offer position, only to find out later that the finance can’t be approved at that “we really stretched ourselves this time” higher figure.
The sellers then fall back to the other offer, and ooophs, upon re-visiting the earlier unconditional offer, the sellers find that they are not in the powerful position they were previously.
Its about here that the previous unconditional buyer puts 2 + 2 together, has worked out for themselves that the other “original winning offer” party can’t complete the transaction, and realises now, that they as the buyers “hold the cards.”
In quite a few situations like this I have seen buyers revise their offer down to $440,000 unconditional. Its about now that the seller feels caught between a rock and a hard place.
Its also about now that some of the parties wished they went with a more experienced salesperson, one who knows how to ensure the situation didn’t happen in the first place, and for whom, if it did through no circumstances of his/her own…..can still work it through to a win/win for both concluding parties.
All of this will fall on deaf ears if you have already made a few offers in recent times, because any good knowledgeable agent would have already explained this too you already. That way you were already forewarned and fore-armed for when the next opportunity does present itself.
Must finish……. off to Open Homes now…….
♣ – and the reason you often never find out what competing offers from other agents were for is that they need to protect their buyers privacy too