If you’ve never sold a house before or it has been a long time, you’ll be surprised to know how much strategy can go into generating offers. You’d think it would be easy for a seller. If you like an offer, you accept. If the price or the terms aren’t quite right, you reject.
However, knowing what types of offers you’re likely to receive and creating a strategy that fits the demand in the current market can have a massive impact on the success of your sale. Offers are a critical part of a the process, and we could talk about them for hours. This post will cover what you need to know before you decide to sell your home.
Keep Your Eye on the Goal
Most homeowners want to maximize the value of their homes as much as possible. Nothing is written in stone, but houses that sell quickly tend to earn more money than those that sit on the market too long. The longer your listing sits, the more likely you will have to reduce your price. Savvy buyers may take notice and hold off for even further reductions. In the worst-case scenario, your house won’t sell at all, and you’ll end up pulling it from the market.
With that in mind, you want to work with a local real estate agent to develop a strategy that will quickly generate interest from qualified buyers.
Nothing can help you enjoy a successful sale like being informed. Some of our other recent posts can help:
- Is Now the Right Time to Sell Your Condo?
- Our Top Tips for Downsizing in Toronto
- Home Renovations That Increase Your Resale Value
When To Accept Offers
The first question to ask is when you should accept an offer. Experienced real estate agents know that timing is critical. Your approach might change depending on how much demand there is for housing in the current market and in your neighbourhood. There are two paths you could take.
- Set a presentation date. You wait until a predetermined date to look at offers. The timing will depend on several factors, but usually, the presentation date takes place 5 to 7 days after your house hits the market. Why delay? The idea is to increase competition for your home and attract the attention of numerous buyers. A presentation date is often an excellent strategy in exceptionally busy markets and can lead to multiple offers and even bidding wars.
- Accept offers at any time. Without a presentation date, a potential buyer can submit an offer whenever they want. It can be the same day they look at your house or a week later. When demand is soft, you may choose to accept offers at any time because it may help your home sell faster.
Types of Offers to Expect
Now that you know how to develop a winning offer strategy, what can you expect when buyers decide to bid? Here’s an overview of the most common offer tyes you can expect.
Pre-emptive Offers
You may have heard the phrase “bully offer” thrown around, especially in the last couple of years when the market was red hot. A bully offer is another term for a pre-emptive offer. If you choose to set a presentation date, an eager buyer might not want to wait. They may submit a pre-emptive offer to convince you to sell before you consider other potential buyers.
Usually, a pre-emptive offer benefits the buyer more than the seller but can sometimes be advantageous to both parties. The buyer will often go above and beyond to make the offer as appealing as possible. They’ll typically bid above your asking price and without conditions.
As the seller, the choice is yours. If the offer is fair, it means the hard work of selling is over, and you can move on quickly to your next step. On the other hand, you don’t want to jump the gun and miss out on a potentially better on your presentation date.
Want to know more about how pre-emptive offers work? We have a whole post about the topic right here.
Unconditional Offers
In a busy market, buyers must do everything possible to stand out. Another tactic they may use is to submit unconditional offers, which means no strings are attached. Once you accept and the purchase agreement is signed, there will be no further hoops to jump through. You can automatically move towards closing the transaction.
Conditional Offers
When the housing market is balanced or leans in favour of buyers, you are more likely to see conditional offers. The buyer agrees to purchase your home at the offered price only if you can meet certain terms. For example, the buyer may want to ensure they can sell their existing property before committing to purchasing yours. Other common conditions are getting a home inspection and obtaining financing.
What should you look for when selling or buying within Toronto? A few of our neighbourhood posts might give you some inspiration:
- Up and Coming Neighbourhoods in Toronto for Families
- Top Dog-Friendly Neighbourhoods in the West End
How to Evaluate and Respond to Offers
Your choices may seem simple, but there’s more to it than meets the eye. Obviously, you can accept or reject an offer. In many cases, you can negotiate to see if the buyer will offer more money or remove their conditions. How you respond will depend on how much competition you have from other homeowners selling in your area.
How do you know what offer is the best? You might automatically be inclined to take the highest bid or one with no conditions, but you want to be careful. Hopeful buyers can get aggressive when trying to beat out the competition and sometimes overbid on a property. As a seller, getting offers far above your asking price might seem ideal. But there’s a catch.
If the buyer can’t get the financing, your transaction could fall through, and you have to start over from the beginning. This is one reason many real estate agents prefer to look at offers from buyers who have first obtained a pre-approval.
A certificate of pre-approval is a letter from the bank certifying that the buyer qualifies for enough financing to make the purchase. However, even a pre-approval is no guarantee. If the buyer offers more than fair market value, the bank can still decline all or part of their financing. This is one situation where conditions can benefit both the seller and the buyer.
You want to get the maximum value for your home, but the money is only in the bank after the sale closes. The best offer is always the one where your transaction goes through seamlessly without unnecessary stress. As always, a local real estate agent who is up to speed with the current market can help you achieve the best possible outcome.
Do you need help creating a winning strategy to sell your home in Toronto? We are happy to answer any questions you may have. Contact us today by email or call 416.443.0300 for a free consultation.
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