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Receiving an Offer

The excitement of receiving an offer - people signing a contract with their agentReceiving an offer is an exciting time in the home selling process. What can you expect to happen, how will the contract review go?

When I was a new agent in 1993, offers were all in person with photocopies of each document for the other agent and sellers, if they were present.

Then for a few years, faxing offers became normative. But there were concerns about  privacy, especially if the fax machine at the other end was a shared one.

But no longer. Most of the time now, the offer package is either uploaded to a secure real estate platform like Glide or Disclosures.io, or they are emailed by the buyer’s agent to the listing agent. Sometimes offers are still in person, with the hefty disclosure packages emailed and not printed, but that’s pretty rare now.

The process of receiving an offer today

  • We’ll update you on showings
  • We’ll update you on the level of interest from buyer agents
  • We’ll update you on the number of disclosure packages downloaded
  • We will ask you when you’d like to review offers (ordinarily 5 – 8 days after it’s available to be seen)
  • And we’ll provide a general sense of how many offers we think will be submitted on the due date
  • On the due date, you’ll be invited to the transaction online, where you can see both the offer summaries for any and all offers and also the contract documents themselves. You’ll enjoy a side-by-side view of the price and terms.

Because Silicon Valley is a hot market, we frequently have multiple offers and an offer due date for our listings. Between the time when the home may be shown or toured at an open house and the offer due date, agents and their clients can obtain the disclosures and inspections for the property, do their own research and due diligence, and prepare their contract and related documents.

Many times it’s 5 – 8 days between first access to the house and when contracts are due and reviewed. We will discuss it with you and you will decide. There are strategic reasons for picking a date for receiving an offer (or more than one).

Gauging serious buyers versus lookers

During that time when the home may be seen, there may be a mix of neighbors and casual lookers in with serious home buyers. Those who download the disclosures tend to be more serious. Those with buyer agents who phone and speak with us, asking questions, and digging a little deeper are even more serious. When buyers come through the open house, we’ll ask who their agent is so that if those agents call we can connect the dots and have a sense of interest.

A day or two before offers are due we may get an idea of how many offers may be coming. Often if there are 10 disclosure packages pulled, there will be 3-4 offers. In perfect, worry free homes that percentage may be higher, and in properties with a lot of issues, it may be less. We truly never know until the offers come in how many there will be. Some agents don’t communicate ahead of time at all and just show up with an offer. Others who look like they will write can disappear.

How you’ll be receiving an offer

Clair and I use Disclosures.io for sharing the disclosure packages and also for receiving an offer or several of them. Here’s an anonymized view of a side by side offer comparison. It is blurrier than I like, but if you click on it, a larger and clearer image should appear). This is a sample to provide a sense of what it is like when a seller views multiple offers on Disclosures.io. The offers can appear in order of when received, or by price, or terms, etc. I typically rank them as I see from most to least attractive.  With multiple offers, most of the time the winning bid has no contingencies of any kind.

 

Receiving an offer - Offer comparison on Disclosures.io - 5 bids side by side

 

In the example above, the lowest offer also was the only one with any contingencies (17 days for loan – also a bit long). The all cash offer included a short, 17 day escrow period. For homes that are vacant and staged, that is an extra 13 days of not paying the mortgage, property tax, or any other carrying costs. Time is money. For occupied homes, that may not be as desirable!

Sometimes a cash offer is not the best overall offer, as there are times when it’s the lowest price. (Some buyers feel that the cash offer is worth much more than the sellers think it’s worth.) In the case above, the all cash offer was also the best offer amount and it had no contingencies of any kind, too.

In years prior, we had the offer packages emailed to us, and I would manually summarize each one, side by side, in an excel spreadsheet. When there are more than a handful of offers, that can be an enormous use of time. That alone makes a system like the one we use now very useful. The sellers get the info in real time.

That said, we still need to double check everything, as the summary is created by the buyers’ agents. It’s rare, but I’ve experienced receiving offers that did not actually match the summary. Once a buyer agent wrote that there were no contingencies, but in fact there was a property condition contingency in the contract.

Listing agents and the seller or sellers can review the paperwork online (such as in a Google Meet video chat) or in person. If in person, though, computers are still necessary for reviewing all of the documents since they are delivered electronically. It makes little sense, in most cases, to print them out. But there are exceptions, of course, as with very elderly seniors who don’t use computers. If local, the listing agent can usually meet with them in person and review on the screen or using paper.

Seller’s move – what happens next when receiving an offer

Once the offers are all in, home owners have a choice.

  • Accept one of the offers
  • Reject all of the offers
  • Counter one offer (regular counter offer form)
  • Counter more than one offer (multiple counter offer form)

Your response after receiving an offer, or a few offers, may have to do just with price, or just with one term, or something else all together. Terms are everything other than the price, such as how long the escrow is to be, or any dates, or who pays what, or a rent back price or terms.

In some cases, the seller wants to work with a particular offer, but it needs a small tweak in price or terms. In those cases, rather than issue a counter offer in writing, the listing agent may reach out to the buyer’s agent and ask if that buyer can slightly improve the offer.

There are other strategies that some real estate professionals employ for the period just after sellers view bids on their home.

When an offer is accepted, typically the next business day the home buyer will wire in the 3% initial deposit to the title company. Once that is received, the listing agent will change the MLS status to either Contingent (if there are any contingencies) or Pending (if there are no contingencies).

 

Related reading from our Valley of Heart’s Delight blog

Should you move out before you sell?

Lighten up your dark home and sell for more!

How to quickly get your Silicon Valley home ready to sell