What Does Multiple Offers Mean?

When your Realtor tells you that there are Multiple Offers that simple means someone else is also bidding on the property. This could be one other buyer or multiple other buyers.

Usually, the listing agent will give a written notice when a Multiple Offer situation occurs. Along with the notice, you will often receive a "Highest and Best Offer" deadline. The deadline is usually 24 hours from the date of the notice. I am saying "usually" because it is the seller's decision on how they want to react the multiple offers. One offer might be so good that they decide to go ahead and negotiate with them instead of letting everyone know there are multiple offers.

What to do in Multiple Offer Situation?

This means you have received the Multiple Offer Disclosure and have been asked to submit your highest and best. In this situation, it is part rational thinking with examining the comps and part a study of human nature. 

The Comparable Sales

First, you look at the comparable sales and see if you are making a fair offer. Where you might have been trying to get the home "under market" before, now you should be hoping to get the home "at market". This because other buyers are going to be looking at the same sales comps and may be making different adjustments than you have.

After your study of the sales you should have a baseline of what you want to offer.

Multiple Bids and Human Nature

When in competition with someone really wanting the house we often see the home selling for over list price. This is true even if the sales comps don't support a higher price. The buyer may be willing to do this for various reasons:

• The winning buyer may be paying cash and not worrying about the appraisal.
• The winning buyer may be financing and be hoping for a higher appraisal or be willing to pay extra down payment even if it doesn't appraise.
• Or it may be the buyer's negotiating technique to beat out other home buyers with an over appraisal like bid. Then only agreeing to pay appraisal price when it the appraisal does indeed come in lower than the purchase offer. 

Make a Strong Offer

Talk to your Realtor about how to make your offer stronger. While most Sellers will focus on the price you may be able win out with better terms. Some examples are:

• Larger binder
• Less or no contingencies
• Shorter time period on any existing contingencies
• Quicker closing date
• Allowing the seller to stay after closing rent free

In Conclusion

In a multiple bid situation, the best advice your Realtor can give is to offer an amount that if accepted you are happy with paying and if not accepted then you feel like you did your best.

Case Study of Multiple Bid Situations of Condos In Northeast Florida

This is a review of condo sales in Jacksonville, Ponte Vedra Beach, Nocatee, St Johns, St Augustine and the rest of Northeast Florida. 

This is a case study of all the condos in Northeast Florida that had the words "multiple offers" in the public or private remarks in the MLS and have sold in the past 6 months. (Please note not all Multiple Offers are listed in the MLS).

• There were 20 condos with multiple offers listed in the remarks have sold in the past 6 months. I feel this is a smaller number than the actual number of multiple offers there were in the market.
• 75% of the condos with multiple offers sold over list price. The average sold price for selling over list price was 3.46%.
• 20% of the condos with multiple offers sold under list price. These average at 98%
• 5% of the condos with multiple offers sold at list price (1 listing).
• Overall the average condo with multiple offers sold at 102.19% (average of sold over list price, under list price and at list price).

Take away from Case Study of Multiple Offers

While the actual numbers may not match your exact situation, the bottom line is in multiple situations the property is very likely to sell over list price. With this information, you should discuss with your Realtor what your bid should be and the possible ramifications if the property doesn't appraise later.