So you’ve listed your house, and now you’re in that enviable position of having received multiple bids. It’s not an uncommon occurrence these days. Home sales are strong, and there still isn’t enough inventory to meet demand. In fact, a fairly recent Coldwell Banker survey found that nearly half of home deals involved multiple offers. The trick then is to choose the right bid for your house in Los Angeles.
Beware of Sketchy Bids
First, in order to choose the right bid for your house in Los Angeles, you need to be aware of what is definitely the wrong bid. While this scenario is rare, it does pay to keep a wary eye out. And that is the case of sketchy bids created by unscrupulous agents to drive the price up for a higher commission.
Here’s an example from Trulia. “In a couple of instances, we made a bid on a house that’s been sitting on the market for a month. There was miraculously another competing offer showing up at the same time! I did some research online, and that seemed to be the . . . tactic a listing agent used to raise the sale price. I know by the law of probability that it couldn’t [legitimately] happen so often.”
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Look at the Bigger Picture
To choose the right bid, you will first need to take a comprehensive view and look at the bigger picture, examining all the aspects of a strong offer to determine whether it’s the right one. Some of the important considerations here include:
- Financial Strength of the Bid – The highest bid isn’t necessarily the best bid, so you need to look at the bigger financial picture, especially where it concerns the buyer. You need to make sure the buyer can actually back up that attractive bid with cash. So when you’re attempting to choose the right bid for your house in Los Angeles, check to see whether the buyer has been pre-approved for a mortgage loan. Other factors to consider are the amount of earnest money and the size of the down payment. Serious buyers will be stronger here.
- Concessions – Also, you don’t want to be swept away by the sale price alone because the right concessions can make a lower bid a better one. Every offer will involve a certain amount of give and take on both sides. For example, a sale price $2,000 dollars higher isn’t better if it means you have to pay $3,000 in closing costs.
- Flexibility – If a certain buyer is willing to be flexible in certain areas, then hers may be the right bid for you. Suppose, for example, you haven’t yet closed on your new home and still need a place to live. If a buyer will be flexible enough to allow you to live in your home for another two months, then that bid is likely the right one.
Set a Deadline
A good tactic to help you choose the right bid is to set a deadline, especially in the current strong seller’s market. You could, for example, announce that you will be accepting bids only until 5:00 pm next Friday. That way you create a sense of urgency among buyers, and you will be able to choose the right bid from among serious bidders. After the cut-off date, you can carefully consider bids and check out buyers’ qualifications without having to worry about new bids coming in.
Don’t Get the Big Head
Having multiple bids is a great position for a seller to be in. But don’t let it go to your head, or you may miss out on the right bid. Just because you’re in the driver’s seat, don’t string buyers along just to exercise power. They may withdraw their offers, and you may be forced to take a less attractive bid.
And then there’s the matter of counter offers – which is sometimes a good tactic to get more but can also backfire. Somewhere between a quarter and half of the buyers back out when you get to the counter offer stage. And you may have been better off accepting the best bid rather than making a counteroffer. This is where you definitely need to lean on your agent’s strong negotiating skills.
Get More Bids to Choose From
Of course, you will want to maximize the number of bids in order to ensure you have a large enough pool to work with, to choose the right bid for your house in Los Angeles. And this chiefly involves choosing the right pricing strategy, not simply cranking your asking price up as high as you possibly can. But the right pricing strategy calls for the in-depth market knowledge that only your agent has.