In a seller's market, where home buyers far out-number sellers, you need a good strategy if you want to take full advantage of the competition between buyers who all want to buy the same property.
When demand exceeds supply, prices rise. In a seller's market, sellers can ask more for their properties. But how much more can you get for your house? Can anyone truly predict what a willing buyer might be willing to pay for a particular property?
The best we can do, to get an estimate of the value of a house, is to compare the property with similar properties that have recently sold in the area. It's not perfect, but it as good as it gets. Or is it?
Why not let the market decide what the property is worth? The best indication of the value of a property is, after all, the price a willing buyer will pay for it.
Auctions are great for this. Good auction promotion gets several buyers together to fight it out for the property they all want, ensuring that the seller gets the true market value for his house.
But what do you do if you did not go for an auction sale, but ended up with a large number of offers to buy the property? You make them bid for the property anyway!
A word of warning, though: If you were too scared to go for an auction sale, you might be too timid for this game of Flinch. But if you have the courage to take the risk of "scaring away" your buyers for the chance to realise the top market price for your property, here is how the game goes:
Flinch
You have prepared your property for the market. It is in tiptop shape. All the clutter is gone, each room has a clear function and the house looks dreamy from the curb. Your Sunday show house has been advertised properly, and crowds of buyers came to view what your property has to offer. And your asking price is reasonable. What more could a buyer ask for?
Well, apparently nothing! Because you receive six offers to buy the property - several of them offering the full asking price. What now?
You do what needs to be done to get those buyers to make better offers for the property, that's what! You do absolutely NOTHING!
Sit and stare at the pile of offers, neatly stacked on one corner of your coffee table, until Monday morning. Don't read them. Just look at the pile.
The buyers are all anxious to hear if their offers to buy your property has been successful. They might even be as anxious to hear from you as you are to dive into that stack of offers!
Go to sleep.
On Monday morning, go through every offer and compare the terms and conditions. Make a spreadsheet if you have to. You want to identify the best terms on offer. Do they offer the terms you require?
If the best offer is all (or more) that you hoped to get, the doubts will start to creep in. You will have a hard time not to flinch. Don't. Most of the offers will have expired at midnight anyway.
Now it is your turn to try and get those buyers to flinch. Fax your answer to all of them:
A "multiple offer to sell". You'll knock them all for a six, because none of them would have ever seen a multiple offer to sell!
Err, maybe I should explain what a "Multiple Offer to Sell" is, before we go any further.
Multiple Offer To Sell
This document is a sly seller's tool, used to make buyers flinch. It is essentially a counter offer, but it is offered to all the interested buyers.
Note that I said it is a counter offer. That means all those offers you received on show day is effectively cancelled by your multiple offer to sell. So, once you send out your offer, there is no turning back.
The Multiple offer to sell tells the buyers that you have received multiple offers to purchase the house and that you are willing to sell the property to one of those buyers, if they agree, at least, to the terms set out in the document. Your multiple offer to sell should contain the terms you are willing to accept for the sale of your house. The buyers can now decide to simply accept those terms, or to sweeten their offers a bit.
The buyers will now be well aware that they are competing for ownership of the house. If they can scrape together a bit more money for their deposit, if they feel they can remove some of the buyer contingencies, or if they can improve on the purchase price, they will do so.
The buyers are free to improve on the terms of the offer and the multiple offer to sell advises them to put their best offer on the table. The document makes it clear that this will be the last and final offer and that you will accept the offer that suits you best.
Your multiple offer to sell only becomes a binding agreement of sale once the buyer accepts or improve on the offer AND the seller accepts one of the offers, once again, in writing. The buyers who were not successful in their bids to buy the house will get a thank you letter to tell them.
You could send out a hundred Multiple Offers to Sell, or only one. The buyers don't know how many multiple offers to sell went out. There might be 10, or there might be one - you don't have to tell them. But it would be reasonable for them to surmise that there are others.
You (the seller) might - or might not - accept the buyer's counter offer. The buyers do not know the terms of any of the other offers that might come back to the seller. The buyers don't know how much those other buyers might have sweetened their offers. The buyers are trying desperately not to flinch!
Buyers don't really have to pay more for the property, if they are willing to play the game of Flinch.
They could just decide to stick to their guns and send the offer back as is, or decide that they'd rather look for another house. But they will be well aware that this is a seller's market, where nice properties are hard to find. And they will (hopefully) have fallen so much in love with the house that they will be trying not to "lose" the property to those other buyers.
The game called Flinch
That, in a nutshell, is the game of Flinch. The seller's game strategy is simple: Put the ball in the buyers' court. Let them decide how much your house is worth. Steel yourself, keep a straight face, and whatever you do, don't flinch!
Sooner or later someone else will...
