How to Deal with Multiple Offers Multiple offers happen in two situations: 1. The listing agent underpriced the home considerably, because he or she did not understand the local values. 2. Limited listing inventory can create a seller’s market and infalate value in the short term. If you are in the first situation, you should have your agent establish the true value of the house. Then you need to decide what the home is truly worth to you. Try not to think of multiple offer situations as bidding wars. You will typically have only one opportunity to put forth your highest and best price in a multiple offer situation. The perfect offer is the one price that makes you happy if you win and feel as though you did your best if your offer is not accepted. Try to visualize your agent giving you the news that your offer was not accepted. If you see yourself saying, “I should have bid $1,000 more,” then now is the time to do it. Don’t let “We should have…” happen to you. 27
If you find yourself in the second situation on a particular house, then it may be best to walk away from that one unless it is your dream home and neighborhood market conditions are favorable for the next three to five years. If you do decide you want to put your best foot forward in a multiple offer situation, there are a few ways to do this without going straight to your maximum comfortable price. The first is what is known as an escalation clause. The purpose of this is to offer above any other offer a preset dollar amount. Many buyers will place a cap on the max amount their willing to place to as well. The wording may sound something like this. “The Buyer’s initial offer is list price with an escalation clause of $1,000 over any other offer up to $5,000 over list price. The seller to provide first and signature page of any offer used to set purchase price.” The benefit is that you are not going $5,000 over list price for no reason. Be careful, though. It might sound like you THE SMART HOME BUYER
