Rick BissonThroughout the country, the Northeast, and Maine, housing inventory, already at historic lows, continued its nearly three-year-long decline last month, with the number of homes on the market falling 14.4 percent, the most dramatic year-over-year decline since the shortage began in mid-2015.

The result: An increase in home prices and multiple offer situations. Perhaps one of the biggest adjustments when working in a seller’s market is understanding the mechanics of multiple offers. As a seller, it’s important to be able to compare and evaluate multiple offers. As a buyer, its crucial to be able to understand the different ways an offer can be strengthened.

For sellers, competing offers may be dealt with in various ways. The most common method is to notify each buyer of the situation and ask for their final, highest and “best” offer by a certain deadline.

Other counter offer strategies include 1. Countering one offer while putting the others to the side; 2. Countering one offer while rejecting the other offers, and 3. Accepting the best offer.
There are pluses and minuses to each approach. Inviting each buyer to make their best offer may produce a better offer than what is currently on the table — or may discourage buyers and result in their pursuing other properties.

Choosing to counter one offer while pushing the others to the side or while rejecting the others may give a sense of initial security yet may ultimately leave the seller without any contract if financing falls through or issues arise during the due diligence period. In order to safeguard against this happening, consider accepting at least one back-up offer.

When evaluating multiple offers, keep in mind that price may not be the only contributing factor for a successful sale. Due diligence time frame, earnest money and time needed to close are all important factors to take into consideration.

An often overlooked element of an offer is the types and terms of the buyer’s financing, if any. The saying “cash is king” rings true in real estate. Cash deals do not require appraisals or investigations. However, cash may not be an option for most buyers. There are many loans types available to buyers and some financing options are known for being less restrictions than others.

For buyers, it’s important to have all of your background work done well in advance of making an offer. If you’re financing, have your pre-approval letter up-to-date and ready. For cash buyers, you’ll need a proof of funds statement. This may be an original bank statement, online banking statement, open equity line of credit, copy of money market account balance or a certified financial statement.

Keep in mind, it’s not always about money. Timing may be an important issue. Buyers may pick a closing date advantageous to the sellers. Closing quickly could save the sellers money or get them into their new home earlier. If the sellers don’t have a place to move to yet, giving them time to find a new home may tip the scales. It is not uncommon in a seller’s market for a buyer’s agent to inquire with the seller’s agent as to when would be best for the sellers to close.

Shortening the inspections time frame is another way to bolster an offer. This will minimize the amount of market time a seller could potentially lose if a buyer decided to terminate the contract or mutual agreement on investigation results and further negotiations were not reached.

A buyer might want to consider personalizing an offer by writing a compelling cover letter describing themselves and their interest in the home to the sellers. Sellers generally like to know something about who they are selling to as many are attached to their home; knowing how committed a potential buyer is to buying their property and how the buyer will care for the home could influence a seller reviewing similar offers.

Keeping emotions between the lines is crucial in any real estate transaction, especially in a multiple offer situation. Be sure to enlist the help of a trusted, expert Realtor who is skilled at handling multiple offer situations; combining their knowledge and expertise with your interest level in the home. Finding a win-win transaction for both sides is the ultimate goal of a true real estate professional. And remember, in the end, a home is worth what a buyer is willing to pay for it and what a seller is willing to sell it for.

This column is produced by Rick Bisson and his family, who own Bisson Real Estate with Keller Williams Realty of Midcoast and Sugarloaf.

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