The Best Real Estate Offers Aren’t Always the Highest
As I’ve written a hundred times in this blog, the best offer is not necessarily the highest offer. Yes, money talks. But not having the highest offer doesn’t take you out of the running. The five pillars below demonstrate other factors that weigh on an offer’s acceptance. This blog was inspired by a recent presentation by a panel of top performing Sotheby’s International Realty agents at a conference I attended.
The Five Pillars of Real Estate Offers
Of course, money matters. But if there are two offers and one is stronger on the following 4 pillars, the highest offer may not prevail.
2. Money Source
Is the buyer obtaining 95% financing or paying cash? Can the cash be easily verified or do other assets (stock or real estate) need to be liquidated.
Is the due diligence period abnormally long? Is there a financing and appraisal contingency? Is there an extended closing? Does the buyer need to sell another property before closing? The fewer conditions, the stronger the offer.
This is a touchy subject, but all agents are not the same. Is the buyer trying to represent himself? This means the listing agent does double the work and takes on twice the liability. Listing agents prefer to work with represented buyers. But not all agents are created equal. The listing agent will consider the following broker-related questions:
- Is the buyer represented by an out of area agent who doesn’t understand the nuances of condo financing?
- Does the buyer’s agent have a reputation for being difficult or hard to get in touch with?
- Does the buyer’s agent have a reputation for deals that fall apart or clients who can’t get to the finish line?
- Does the buyer’s agent have a reputation for being reasonable and closing transactions?
In today’s electronic age, most individuals have a digital footprint. What is the client’s online presence? Has this client jerked other sellers around and backed out of transactions? I was recently introduced to a buyer from an out of town brokerage. That buyer was incredibly nasty to me. After I did not hear from the buyer for a week, I received an offer on one of my listings from another agent with this buyer’s name on it. The world of luxury real estate is small.
At the end of the day, two offers that come in at the same price will not be equal. If you want your offer to be as competitive as possible, you will look at all 5 pillars of the real estate transaction.
*Inspired by a presentation featuring Michael Dreyfus (Sotheby’s International Realty, Palo Alto) at “Level Up,” a Sotheby’s International Realty Conference.