Multiple offers? Why the highest should not always be first option
With the growing demand for property and many areas experiencing stock shortages, it is becoming increasingly common for sellers to get multiple offers on their home, says Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa. But he notes that while it might be tempting for the seller to accept the offer with the highest monetary value, it is essential that they assess each of the offers they receive based on its own merits.
“At first glance it would seem that the offer with the highest rand figure would be the natural choice, however the seller should read through each of the offers carefully, paying specific attention to the clauses in each,” says Goslett. “In cases such as this, sellers will benefit greatly from working with a trusted real estate agent who can assist them through the process of selecting the right offer to purchase. An agent’s role is to act in the best interest of the seller and ensure that the best possible result is reached during the property transaction. While the highest value offer is the ultimate goal, there are several other elements that will have an impact on the transaction and should be considered before making a final decision.”
Sellers, first tick off these boxes
- The seller needs to ensure that all documentation regarding the property is up-to-date and correct. If any renovations or additions have been made to the property the seller is required to have copies of any council-approved plans. This will reduce the time it takes for the property to be transferred and will ensure everything goes smoothly.
- Ensure that the contract is in plain language and easy to understand. It should also detail all the elements that the parties need to agree to, including factors such as which items will be regarded as fixtures and fittings. Having these aspects in a written document will reduce any chance of a misunderstanding or disagreement in the future.
According to Goslett, when the seller is considering each of the offers received, there are a number of aspects they should pay particular attention to. These factors will help them make a decision.
Offer is subject to conditions
The majority of offers that a seller will receive will be subject to certain conditions transpiring first, such as the sale of the buyer’s previous home. While it is not very common to find an offer that is totally void of conditions, the seller will need to keep in mind that their home will be off the market while the terms and conditions of the offer are waiting to be met.
Does the buyer have a deposit?
Generally banks will require most buyers to have a deposit of between 10% and 30% of the purchase price of the home to be approved for finance. A deposit will greatly increase a buyer’s chances of bond approval. A deposit is an excellent indication that the buyer is in a financial position to purchase a home and are serious about the offer.
Consider the financing
Simply put – cash is king. A cash buyer will not be reliant on the bank for bond approval before they are able to go ahead with the purchase. This makes the transaction far less complicated, so less can go wrong. It is also important to remember that a bank is far more willing to grant finance to a buyer that requires less than 80% of the purchase price of the property.
Although it is generally not an issue, it is advisable to be cautious of buyers that require third parties to sign a surety on their behalf. The seller should also look at whether the buyer can provide proof from the bank that the funds are available to back up the offer.
Date of occupation
Note the date of occupation on each of the offers. Ideally the occupational date should coincide with the transfer date as much as possible. This will ensure that unnecessary stress and complications are kept to a minimum in the event that the deal falls through. If the offer contains any suspensive conditions, the sellers should not allow occupation of the home until these conditions are met and all documentation has been signed by both the buyer and seller at the conveyance attorney. The seller can counter the occupation date, if the best offer on the table doesn’t quite meet their timeline.
“Once a seller has considered all other factors and are content to move forward, they should then consider the value of the offer,” says Goslett. “In some cases, a lower offer might be the right offer depending on the conditions presented. The seller needs to select an offer that best fits their needs.”