Real estate agents have to be on their toes in this hot market, dealing with bidding wars and multiple offers while protecting their clients’ best interests. At an Inman Workshop titled “How to Navigate Multiple Offers” during Connect Now on Tuesday, Maura Neill, a team leader at RE/MAX Around Atlanta Realty, and Koki Adasi, a team leader at Compass, shared their tips and tricks with moderator Craig Wilburn of Keller Williams Realty Gainesville.
“Like many of you, we’re experiencing challenging times on the buyer side, and even on the seller side,” Adasi said.
Over the last few months, both Adasi and Neill said they’ve seen anywhere from 10 to upwards of 30 offers on properties in their markets, even with million dollar properties getting multiple offers.
But Adasi also noted that just within the past two weeks or so, the onslaught of offers has started to wane a bit as more buyers opt out of the market because they fear not being able to win a bid on a home.
“There some significant buyer fatigue in the marketplace,” Adasi said. “So you’re seeing places that you would think would have 15 offers on a property, now it’s having 3, or 7 offers …”
Adasi said that a lot of times deciding on the best offer just boils down to whichever buyer is willing to put more money forth and potentially take more financial risks.
“With all the tricks and things I’ve seen people do, it comes down to money,” he said.
The most attractive offers are typically those where buyers are paying for both sides of the transfer and taxes, or offering to pay the seller’s listing broker.
Neill added that buyers are also refraining from naming closing dates, and instead letting the seller dictate those terms.
“The financial risk that people are taking on is much more extreme than we’ve seen in the past,” she said.
Neill also said that something that sellers in her market in Atlanta have responded well to is what’s called “option money” in Georgia, which is basically additional money a buyer can offer a seller that won’t impact the appraisal. Depending on how the contract is written up, option money can be paid directly to the seller or held in a trust account of whatever party holds the earnest money. Sometimes it may be refundable to the buyer, sometimes not. Likewise, it might be released when the contract terminates, or sooner — it just depends on how the contract is drawn up.
“It’s a legal way for the buyer to offer the seller money outside of the purchase price that may or not be applied to down payment,” Neill explained. “This is the thing that’s winning the contract.”
“I hear people say all the time, that won’t work for my market, that won’t work for my clients …” Neill added. “Go to your broker, go to your legal counsel and see what it will take to make that legal in your state. It could be that silver bullet for that buyer who really wants that house.”
Neill said the amount of option money offered can vary widely, but tends to hover around $2,000 to $2,500 in her market. But, there have been times when even a small amount has made a difference to the seller because of the gesture it makes. “We’ve had sellers accept option money as low as $500,” Neill said.
With so many offers on the table these days, one workshop attendee wondered how agents can better sniff out any “bait and switch” buyers.
“As the listing agent, your job to uncover all risks in the contract and reduce risks,” Adasi said.
Agents should be thoroughly vetting financials and getting that information in writing from lenders to be sure sellers aren’t taking on any more financial risk than necessary. Be sure to also spell out in contracts that if a property appraises lower than the buyer’s offer, the buyer needs to be prepared to cover the difference.
Neill later added that sellers should use caution when accepting offers that waive the appraisal. “If you’re not checking that, and they [put forth] a low amount of earnest money, their skin in the game is so small,” she said.
To help sellers navigate offers, Neill and Adasi said they both make use of organized Excel spreadsheets that allow buyers to clearly see different components of different offers, and weigh what’s important to them. Neill said she color codes her spreadsheet so that she can flag things she wants the seller to be sure and take note of.
In closing, the workshop speakers discussed the importance of upholding the Fair Housing Act by making sure to give all buyer agents the same information in multiple offer situations.
Neill said she’ll oftentimes have her sellers write a thank you letter to bidders, stating that an offer has been accepted, and potentially why, depending on the circumstance, so that communication is absolutely uniform across the board. That way, the seller is also giving out that information directly and signing off on it, so it’s completely independent from the seller agent.
“And please for the love of God, stop using the buyer love letters,” Neill added.