What should you do when you receive more than one offer on your home? Sounds like a bit of a stupid question – you accept the highest offer, right? Well, maybe not. When it comes to selling a property it’s not all about the money, it’s about getting the best price while ensuring that the sale has the best chance of going through.
Many offers to purchase carry suspensive or other conditions that can cause the sale to fall through. While it is common for a buyer to buy a home subject to his own home selling for a price acceptable to him, this means that your own sale is uncertain and, if the buyer's home doesn't sell, nor does yours. There are, however, ways for a seller to protect himself against the vagaries of a suspensive sale – for instance, by inserting a clause in the agreement to the effect that the seller can still consider other offers during the suspensive period and, if another offer is on better terms (such as a cash deal), the buyer is given a short period in which to match the better offer – failing which his offer lapses.
Clauses and other issues
Suspensive clauses are not the only issues that sellers who receive multiple offers should consider. Adrian Goslett, CEO of RE/MAX of Southern Africa notes that sellers should also take the following into account:
Is the buyer presenting a deposit? Banks will require buyers put down a minimum deposit of 10% of the purchase price of the property. In some cases they could be asked for up to 30%. The larger the deposit, the better the buyer’s chances of securing a bond. A deposit is also a good indication of the buyer’s financial position and how serious they are about buying the home.
Finance or cash? The old adage of cash is king remains true. Banks are also far more willing to grant finance to a buyer who requires less than 80% of the purchase price of the property to be financed. While it is generally not an issue, it is advisable to be cautious of buyers who require third parties to sign a surety on their behalf. The fewer complications involved in the financing the better, as less is likely to go wrong.
What is the date of occupation? If feasible, the occupational dates should be as close to the transfer date as possible. For the most part 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 seller 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 conveyancing attorney.
Goslett says that once a seller has considered all the aspects of the offer and is satisfied, he can then consider the price of the offer. It is possible to find that a lower offer may actually be the right one, provided the buyer has access to finance and is serious about purchasing the property.