When Should a Seller Take a Lower Offer?

In a highly competitive market, a seller may be put in a situation where they have multiple offers on their property.  Whether its two, twelve, or twenty offers, multiple offers situations pose a unique position for a seller.  The seller has the opportunity to analyze multiple offers and pick what they believe to be the best one.  Often in a highest and best situation there is no negotiation, you simply take the best offer.  So how do you know which offer is the best?  Is it the highest net dollars to seller, is it the offer from most qualified buyer, the offer that closes the quickest, or the offer with the fewest contingencies?  Every situation is different.  I want to focus on the net to seller.  It is not always the case that the seller should take the highest net to seller offer.  The reasons being, one –  you need to look at the value and two – timeline.  If the property was priced correctly in the first place (and because it drew competitive offers I’d hope that it was competitively priced), the argument needs to be made that a high offer, $10,000 to $20,000 above asking price, will it appraise?  Are you going to waste your sellers’ time, while it takes 2-3 weeks for an appraisal to come back?  If it comes back low, can the buyer absorb that?  If the buyer cannot account for a low appraisal, the odds for the buyer to back out are high.  Now you’re in a position when you have to put the property back on the market and restart the entire process.  In this situation, the competitive condition that you originally established is gone.  Aside from losing momentum and time, sellers may be making decisions based on a specific timeline.  For example, they may be selling their principle residence and taking the proceeds from the current offer to purchase a new residence.  If the amount and timeline of the highest net to seller offer are altered this leaves the sellers in a quandary.  Thus, when given multiple offers, don’t be drawn strictly to the highest net to seller offer without considering the results.