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Buysellown.i…, Both Buyer and Seller in Saint Petersburg, FL

When you have multiple buyers what is the best way to select the best buyer?

Asked by Buysellown.info, Saint Petersburg, FL Mon Aug 3, 2009

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Hi BuySellOwn --

The highest offer is not always the best offer. As David said, you have to get past the closing to get your money, so you want to give the most weight to verifying that the buyers are strong. With the ever-changing rules from mortgage companies lately, it's getting harder and harder to recognize a good pre-approval letter from a poor one.

My first piece of advice would be to have a good Realtor who has a trusted relationship with a reputable lender. If you are likely to have multiple offers on your home, I would suggest that you make one of the conditions of bringing an offer to be that the buyer must be pre-approved with "XYZ Mortgage Company" (the reputable lender you can trust). While you cannot require that the buyer use a particular lender, you can make it a stipulation of your willingness to look at offers that the buyer be pre-approved with someone you trust. In this way, you will be able to view the "conditions" that the lender will place on your buyer in order to close. This may not be a 100% guarantee that the buyer is a good one, but it gets you a step closer to that confidence. Too many small mortgage brokers issue a pre-approval knowing there are problems but hoping that they can get around them before the closing, resulting in time wasted and no closing.

In addition, if you do have multiple offers, I would make that known to all buyers so that they bring you their "highest and best" offer, mentioning that a strong the escrow deposit will also reassure the Seller as to the credit-worthiness/seriousness of the buyer. After you select the one buyer that you want to go forward with, I would tighten up the deadlines (7 days for inspections, no more than 21 days for final loan commitment) and then encourage any or all of the other buyers to go into a "back-up" position in case it doesn't work out with Buyer' #1. You can also add the clause to Buyer #1's contract that you are keeping the listing active in "First Right of Refusal" status. This would give you the opportunity to push out Buyer #1 and take Buyer #2, if Buyer #1 won't remove any/all contingencies.

This is about the best you can do to try to insure that you get to closing. You are extremely lucky to have multiple buyers offering on your property. I'm assuming you have a Realtor representing you so that you tighten everything down as well as it can be. It would be extremely frustrating to have the flurry of buyers disappear because of mismanagement.

Best of luck to you.

Louise Warring, e-PRO, CSP, CNS
Coldwell Banker Residential Real Estate
2 votes Thank Flag Link Mon Aug 3, 2009
Annette is right--multiple offers have been rare in the past couple of years, but according to the FAR (Florida Association of Realtors), we have hit bottom and this trend will continue(!), especially on well-priced properties--the trend has already begun with foreclosures and short sales.

The best offer, as Louise pointed out, is going to be the one MOST LIKELY to close--which means all the pieces must be in place--price, time frame, and some "skin in the game". Most if not all lenders are now requiring a mimimum investment by the buyer of 3.5% (FHA down payment), even when the buyer is also receiving down-payment assistance. Since Pinellas County offers $10K or more to buyers who qualify, if any offers are from CDC assisted buyers, it's still a good idea to speak with their lender and make sure they've got some cash reserves at least--the days of zero-down are gone, perhaps for good!

Of course, a full-priced cash offer is always going to be the best! Good luck!!
1 vote Thank Flag Link Tue Aug 4, 2009
BuySellOwn,
Congrats on successful planning and marketing that resulted in multiple offers. That is not as uncommon as one would think. The guidance provided by Louise is remarkable. Read each sentence, get the aid of a real estate professional, and understand you can not over qualify a buyer or pay too much attention to the details.

The marketing and closing on a home could have been decribed as keeping the wheels on a 100 wheel wagon. Today it is keeping 200 wheels on the wagon, all wheels going in the same direction, at the same speed while others are adding and removing wheels in route. It's been a while since I've experienced an 'easy' closing even though at the closing table, all went smoothly.
Annette Lawrence
ReMax ACR Elite Group, Inc
Web Reference: http://www.MyDunedin.com
0 votes Thank Flag Link Mon Aug 3, 2009
I have no idea what buyers motives or Motivation has to do with an offer, maybe Pamela could expand on this for us.

To this Realtor, Regardless of motivation, second home, investment, first home, new home, home for children - all that comes into play is as David details, its the bottom line that happen, not some pie is the sky
"i hope this comes true"

The harder the offer, the fewer the contingencies the better off you are.

Another words the higher offer that depends on the sun setting in the East is not worth much.
0 votes Thank Flag Link Mon Aug 3, 2009
I would have to disagree with Jodi, the net profit must be realized, so ability to close is key. Pick the best price along with the most qualified. If they can't come up with the funds then a higher offer is useless.
0 votes Thank Flag Link Mon Aug 3, 2009
Always look at the Seller's motives and motivation. If you are looking at a "bank owned" property the bottom net is what they are looking at. Cash has some weight, but with a 20% plus down payment the playing field becomes more even, unless the house will not appraise.

Other factors to consider besides price:
1. Does the seller want a fast or extended closing time and which buyer can meet that?
2. Is it an "as is" sale? If not, an "as is" offer may be more enticing to a seller, especially if the house is already vacant.
3. If it is not an "as is" sale, what are the repair limit liabilities in the contract?
4. How clean is the contract, what type of contingencies are in it? The fewer, the more appealing to the Seller. In this market, a contract contingent upon the sale of another home without a "kick out" clause pretty much bumps that buyer's offer off the table.

Pam Cohn
Broker Associate CDM, GRI
Prudential Tropical Realty
pcohn@prutropical.com
727-204-7155
0 votes Thank Flag Link Mon Aug 3, 2009
in This market, you have to give much weight to a offer that has the credit issue resolved-

Many offer fall through because of buyer can't get the loan.

John
0 votes Thank Flag Link Mon Aug 3, 2009
The best way to select which buyer is by figuring out which offer brings you the biggest return. Period. Factor in what they're asking you to pay in closing costs. If they are asking you to buy a home warranty. If they want you to do any repairs and the cost of those repairs. Bottom line...your highest net profit is the best buyer!!!

Jodi Smith
Atlanta Real Estate Agent
Keller Williams Realty Consultants – Roswell, Georgia
678-763-6025
jodismith@kw.com
Tweet Me: http://twitter.com/JodiRSmith
0 votes Thank Flag Link Mon Aug 3, 2009
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