You’ve done all the prep work. There is a For Sale sign up. The dogs are in kennels, the kids are at Grandma’s, and showings are in full swing. You’re exhausted.
Offer presentations are next! Hang in…it’s almost over.
When listing a house, market conditions determine how to direct offers and negotiations. In a balanced market or a buyers’ market, you may consider offers as they come in. The timeline is flexible, and conversations can go back and forth at a relaxed pace for both parties.
In a strong sellers’ market, though, things are very different. To allow proper exposure to potential buyers, you will likely set an offer date. It can be anywhere from 2-7 days (sometimes more) from the listing date.
For the purpose of this discussion, we will assume a sellers’ market.
How Many Offers Will You Get?
Your marketing and pricing strategy will affect the number of offers you receive.
- Overpricing a home can result in not getting any offers at all, regardless of market conditions.
- Underpricing – or listing at a price that is lower than you would accept – usually results in many offers. Sometimes, you may even get a Bully Offer.*
- Listing at market value can produce one, two, or more offers, but without the frenzy that happens with an artificially low list price.
What To Expect On Offer Day
Your agent will keep track of all the showings you have, and will communicate with the buyers’ agents to determine the amount of interest in your property. They will answer questions and provide information, as needed, to encourage offers.
Buyers’ agents will “register” offers through an online portal, by email, or by phoning in their intention to submit an offer to the brokerage. Each agent will receive updates as subsequent offers are registered, so that everyone knows how much competition there is.
Sometimes, offers come with personal letters, and even family photos, from buyers who hope to have you choose them over others. Some sellers really enjoy this personal touch, while others find it to be a little emotionally draining.
At the presentation appointment with your agent, you can choose to meet face-to-face with the buyers’ agents to discuss their offers. (For many years, this was the preferred method of making offers, as it allowed sellers to ask questions and even to sign back paperwork on the spot. Buyers’ agents often had their clients waiting in their cars outside, ready to finalize a contract.)
Of course, COVID-19 has turned a lot of traditions on their heads, and this one was already on its way out. Especially in multiple offer situations, many sellers don’t enjoy feeling pressured to meet with other agents. They prefer to have offers emailed to their listing agent, and consider them privately. We seldom meet in person with buyers or their realtors for presentations these days, mostly for health and safety reasons. In fact, we have done the majority of our presentations virtually over Zoom or FaceTime!
What Do Offers Look Like?
If you receive many offers, your agent will present each one to you and review the details. Each offer usually includes 9 or 10 pages. You will be especially concerned with these things:
- Price
- Closing date
- Deposit
- Conditions
Price and closing date are straightforward. You know what is acceptable to you.
A Word About the Deposit
The deposit is a portion of the buyer’s down payment. A brokerage or lawyer holds it, in trust, until closing. There is usually a suggested dollar amount in your listing, but buyers may offer a different amount. It is a negotiable element of any offer.
This detail is worth considering for two reasons: It can indicate the both buyer’s ability and intention to complete the purchase.
Deposit money, in the case of a failed sale, is not automatically given to the seller. However, it is usually lost to the buyer.
A buyer who wants to put a $5000 deposit on a $1,000,000 house raises a red flag. In proportion to the size of this purchase, the deposit doesn’t make sense – can they really afford the place? Do they actually intend to follow through and pay the balance on closing?
An unscrupulous buyer who has put down a very small deposit could tie up the property, only to walk away from a sum that isn’t substantial enough to be a deterrent. If and when that amount should be released to you, the seller, it would not be nearly enough to compensate you for the inconvenience and losses incurred.
The timing of the deposit is also worth mentioning. The pre-printed Agreement of Purchase and Sale includes a clause that stipulates that the money will be in trust with the seller’s representative within 24 hours of acceptance. Buyer and Seller may agree to strike that out and make other arrangements for a slightly longer waiting period. For instance, if the Buyer banks with an online institution, they may need a few days to order a bank draft. You might allow them to make a small deposit within 24 hours, followed by the balance of a larger amount later.
It isn’t (yet!) standard practice, but some sellers are willing to give priority to offers that come with (certified) deposit cheques attached, as this shows good faith.
Conditions – Are They Deal Breakers?
Newer or nervous buyers understandably loath the thought of removing all conditions. The two most common conditions are finance and inspection. Less often, someone might add a condition that they must sell their current home before firming up this purchase.
Even if a buyer has been fully approved for a mortgage, their lender has to approve the actual property for the right amount. If their down payment is low, a buyer may be nervous to make an offer without the safety net of a finance condition. They worry that the bank will not agree to the value of the house they just bought.
A home inspection (along with a septic and/or well water inspection for rural property) has always offered a measure of peace of mind. It gives buyers a chance to get to know a property better before making a final decision to seal the deal.
As the seller, you will probably be most impressed with the offers that come with fewer, if any, conditions. Given a choice between a slightly lower offer with no conditions and a higher one that will take a week to firm up, many sellers choose to take the ‘sure thing.’ Remember that the conditions provide an escape for the buyer.
Depending on the situation, though, if other factors are more important to you, you may choose whichever offer appeals to you most!
Choosing an Offer
You, the seller, are in control at the point of receiving offers. Each offer will have an expiration date and time, and until that time, you have options for all of them.
- You can accept the highest and best offer. It’s always great when you get a high, firm offer right away and the choice is clear.
- Refuse all offers. If you don’t get what you want, you can reject all offers, even a firm offer at your asking price. (Do this only if you under listed to force a bidding war, of course.)
- Ask all offers to improve. You can tell everyone who offered that you want them to do better, either by increasing the price, removing conditions, or changing something else. (Your agent will do this verbally without physically signing the offers back.)
- You may deal with the highest offers only. Sometimes, a couple of offers stand out, and are very close to each other. You may choose to approach each to see if they are willing to remove conditions and/or increase their price.
- Negotiate with one. You can make a written counter-offer to one buyer. This doesn’t happen very often, since it puts that one buyer in control of what happens next. It’s usually better to ask the buyer to re-submit their original offer to you.
All offers are confidential. No buyer may know what any other buyer offers, or any of the competing offers’ terms, so agents cannot disclose details for the purpose of helping one buyer to know how to beat out another.
Once you accept an offer, the status of your listing will be changed on the MLS. A conditional sale will allow your listing to stay on realtor.ca till the deal firms up. A firm sale will be removed from realtor.ca, and will be updated in the Board database to show the accepted selling price.
The Conditional Period
If you accept an offer with conditions, your house is not sold until the buyer removes those conditions. The option is the buyer’s to firm up, walk away, or attempt to renegotiate with you if they find a defect. (During this time, if they decide not to remove their conditions, the deposit money will be returned to them in full.)
They will have until the deadline specified in the Agreement of Purchase and Sale to notify you in writing that they are fulfilling or waiving their conditions.
When a buyer has an inspection and finds a defect, you can decide whether to make a new agreement for a lower price or not. You can refuse to change the original terms of the agreement, and re-list your home for sale again.
Most often, buyers remove their conditions, the deal firms up, and you hang the sold sign out front.
Then you go and enjoy a well-earned glass (or bottle) of wine!
If the thought of handling all this sounds stressful, you’re not alone! Let us help you through the process 🙂
*A Bully Offer is one that is intended to stave off a bidding war by coming in strong and early (ahead of the offer date, and irrevocable before the offer date). You may consider such an offer, as long as you submit new written direction through your brokerage and you inform all interested parties in writing.
