Negotiating in a strong market
Regular readers know that we consider ourselves in a strong market. Of course, as with all things real estate the market is very specific to your location and although North Idaho real estate is moving at a comfortable pace, not every nook and cranny of our market is booming.
Many Realtors who were active during the feeding frenzy of 2004-2007 and survived the recession know how to handle situations of multiple offers. This phenomena is back and we are experiencing that reality often with well-priced listings. So how do you protect a seller or how does a seller protect themselves when marketing a hot property?
It is pretty easy when several offers are received at once. We have a form for that. The seller will counter all parties with our RE-32 Multiple Counter Offer form. This puts each "bidder" on notice that there are others vying for the same property and that each is being encouraged to take another stab at an offer. Neither the buyer nor the seller are obligated to continue to dicker. The buyer may respond that their offer is final, up the ante, or simply walk away. The seller may make different counter offers to each prospective buyer as the form states: "SELLER is making one or more counter offer(s) to other prospective BUYER(s) on terms that may or may not be the same or similar to the terms contained herein."
We agree, the language can be a bit unnerving and the seller is not obligated to sell to any of the bidders regardless how aggressive their next offer may be. There was a time when sellers would often get well above their asking price because desirable properties were so scarce. We are beginning to see this happen with increasing frequency today.
Most offers lower than the asking price will receive a counter offer from the seller. In that event, the seller reserves the right to withdraw that counter offer anytime prior to the delivery of a signed counter: "Until Final Acceptance has occurred either Party may withdraw any offer, counter offer or multiple counter offer to buy or sell the PROPERTY."
Often, even when a property sits on the market for a while, a mysterious law of attraction causes another offer to be tendered on the heels of the first. When this happens a seller is in a position to accept the second offer if the counter offer has not been signed and delivered to them. A buyer who likes to negotiate can find themselves looking again if they make too many attempts to negotiate or deliberate too long over a reasonable counter offer from the seller.
A seller's agent can anticipate that another offer may come while waiting for a buyer to accept a counter and protect their seller by having them sign a document withdrawing their counter offer at the same time they are signing the counter offer. That way, if another offer is received that is better than the first the seller can accept it by delivering the withdrawal notice that their agent has prepared in anticipation.
Negotiation is expected by both parties. In a strong real estate market though, the risks increase with the level of activity. Be careful out there!
Trust an expert...call a Realtor. Call your Realtor or visit www.cdarealtors.com to search properties on the Multiple Listing Service or to find a Realtor member who will represent your best interests.
Kim Cooper is a real estate broker and the spokesman for the Coeur d'Alene Association of Realtors. Kim and the association invite your feedback and input for this column. You may contact them by writing to the Coeur d'Alene Association of Realtors, 409 W. Neider, Coeur d'Alene, ID 83815 or by calling (208) 667-0664.