Inspiring a Bidding War Part 4 by Linda O'Koniewski

Strategy for a bidding war must include setting a time frame for reviewing offers.  Sellers should see a lot of action in both strong and weak markets if their house comes on the market new with the following details: in excellent condition, staged, painted to appeal to buyers, and accompanied by a powerful internet presence, including exemplary photographs and priced so that all buyers looking in that price range perceive it to be a good value.  

But where so many agents fall down, or are unprepared (because I do believe some agents are taken by surprise when they have fallen into such a property) is that they have prepped neither the seller nor the agents on the process for reviewing offers.

One of the most common mistakes sellers’ agents make is to not discuss ahead of time with the seller when they want to review offers.  Most agents simply deal with offers as they come in and without a plan.  All agents need a plan for reviewing offers, yet it is often done ad hoc and can result in missing out on maximizing offers for the homeowners.

Nothing is more frustrating to buyers and their agent then to run and see a new listing that meets their needs on the first day it is on the market, write up a full price offer, only then to discover that the seller is so shocked and unprepared for such a thing to happen that the response is that the seller wants to wait until after the scheduled open house to make a decision.

Who can blame the sellers?  They thought the market was slow and didn’t expect to have to make a decision so soon.  They might not even know where they want to go yet, because the agent did not prepare them for an offer or discuss their plans if they received a qualified offer.  Additionally, it is not unusual for the seller who receives an offer on the first day they are on the market to have a reaction like, ‘‘Damn, we under priced the house we got an offer so fast.”

However, good agents, who counsel buyers on new properties that are priced “on the money” know that no seller would not consider taking an offer when it is new to market if it wasn’t at least close, at, or over the asking price.

We have bullet points we review with the seller when we list the property to avoid this kind of confusion, and make sure the seller is prepared to deal with an offer according to plan.

There are two kinds of risks involved in accepting offers right away and in holding offers until after an open house.  A seller must understand the risks before directing their agent on how to handle the process of reviewing offers.

If a buyer is willing to pay full price for a home when it is new to market, and is told to wait until after the open house, and that buyer learns that there are no other offers on the properties after a lot more showings, there is a risk that the buyer will not feel compelled to pay full price to buy the house because others who saw it were not inclined to make an offer.

Conversely, if a seller decides to take an offer the first day a property is on the market, then that seller will never know if he might have been able to sell the home for more than asking price had he proceeded with a strategy of more showings and an open house.  Agents need to strategize with their seller based on the local market conditions, condition of the house, and price of the house to decide how to handle offers before an offer arrives.  Otherwise its pandemonium and a lot of emotional havoc on buyers and sellers who don’t feel like they are being treated fairly because they weren’t aware of the rules of how negotiations would be handled up front.  Having a plan makes all the difference to buyers and sellers.

Do you have a Bidding War Plan? Have you been involved in one? Let us know how it went!