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October 13, 2009
Multiple Bidders for FSBO
We are selling our 2Br co-op in Park Slope FSBO and just had our first Open House 2 days ago. Yesterday we received our first offer and judging from the overall response, are expecting to receive more in the next few days. Any advice on how to deal with multiple bidders if some of them have contingencies (e.g. an engineering report)?
Comments
You should be the ones who will know best how an engineering/inspection will turn out. You chould be more concerned about a buyer's ability to secure a mortgage. Take an all cash offer over a mortgage contingency, all other things being equal.
Do they come with pre-approvals??
Posted by: daveinbedstuy at October 13, 2009 10:57 AM
The first offer came with pre-approval. We are sure the engineering inspection will go fine (it's a very well-managed building) - i'm just not sure about the timing of it if we are negotiating with multiple bidders. Do we just tell them to go ahead and send in their engineer so that they'll have the report by the time of negotiations? Or is it mean to make them spend the $$ for the engineer if their bid may not turn our to be the winning one?
Posted by: kanevj01 at October 13, 2009 11:20 AM
I wouldn't worry about seaming "mean." Let them all know the situation, that they can send their inspectors and you will accept the best offer. Tell them they have a certain period of time to do so...two weeks??
Otherwise if you are fairly confident about the pre-approved buyer and the price is fine, go ahead and accept it.
are you expecting a biddiing war??
Posted by: daveinbedstuy at October 13, 2009 11:29 AM
Yes, a bidding war is likely. We priced very competitively hoping that the market will establish the right price.
Posted by: kanevj01 at October 13, 2009 11:33 AM
I think you'll create ill will if you give multiple bidders the impression that you're accepting an offer and have them spend 700 bucks (or whatever the going rate is) on an inspection. You can accept the best offer (either highest, or the one with less contingencies if nearly the same) and give them a certain number of days to get the inspection done. Keep the next best bidder as a backup in case the 1st doesn't follow through.
Another option is you can play the game the brokers liked to do during the bubble. Get all your bids, and then go back to them and tell them you have multiple bids and your deadline for "best and final" bids is (pick a date in a week or so) and see if any of them stretch to go a bit higher.
Posted by: Bklnite at October 13, 2009 11:35 AM
Thanks, Bklnite. That sounds like a reasonable strategy. (Of course we wouldn't make people shell out the $$ for an engineer without letting them know that there are other competing offers.)
Posted by: kanevj01 at October 13, 2009 11:48 AM
I've sold FSBO with bidding wars. You can do auction style where you go back and forth or you can do last and best. You can also sell "as is".
Either way, get a bid on an offering sheet. I sold a couple of times to people who were not the tip top price, but I knew they'd sail thru the board. You can find offer pages online.
Posted by: Ringo at October 13, 2009 11:53 AM
How do you arrange the auction-style one?
Posted by: kanevj01 at October 13, 2009 1:12 PM
buyer 1 offers 300k. you call buyer 2 (and 3 etc) that you have an offer of 300 and would they like to beat it. and on and on. you can say you'll only accept bids that are at least 5k up or whatever you like. I asked my attorney about this kind of thing so many times -- mostly because I was so used to brokers and their LACK of information -- but, as a seller, you can really do whatever you like as long as you don't discriminate. I felt the more transparent the system, the better.
Posted by: Ringo at October 13, 2009 3:30 PM
I wouldn't pay for an engineer until you'd accepted my bid and sent me a contract. Not on a condo/coop that looks to be in decent shape. On a house, I'd pay for the engineer before I hired my lawyer. On a coop, I'd pay for the lawyer before I hired an engineer.
It isn't just the money, it is the time involved and the emotional energy.
As a buyer, I kind of like the sealed auction approach. Just tell all the bidders that you want their best offer by 5:00 on Wednesday and send a contract to the best offer.
Also speaking as a buyer, I'd say that you do well to just be honest about the state of the building. The engineer shouldn't be finding things you don't already know about.
Posted by: serpentor at October 14, 2009 2:11 PM
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