Selling for more than the asking price
When the market has a large number of buyers and not enough properties to meet the demand, you may find yourself in a strong position if your type of property is highly sought-after. If the price is right, you should get a good idea that your property type is popular shortly after you put it on the market. You might, for instance, quickly get several requests to visit.
In this type of market, you could also end up receiving multiple offers to purchase, which could lead to overbidding. This is when one or more buyers offer a price that is higher than your asking price. You can use various strategies to encourage overbidding:
1. You could inform visitors and those interested that you are accepting offers until a certain date and that you will not be making any decisions until then. This will likely create competition between buyers.
2. You could also wait to receive a first offer, and then ask those who have expressed interest if they want to make one too, letting them know when you will be making your decision (ideally respecting the deadline decided with the buyer who made the first offer).
3. If you already have several offers on the table and have not accepted one yet, you can ask each of the contenders if they want to increase their offer. Any of the terms can be changed: price, conditions, closing date, occupation date, etc.
Learn more in Multiple purchase offers article.
A notary's advice
Take care not to mix up an invitation to increase an offer with a counteroffer. When a seller makes a counteroffer, either verbally or in writing, i.e., proposing a price or other change(s) to an offer to purchase, the seller must continue with that buyer if they accept the proposal. In that event, there is no point in inviting other potential buyers to up their offer.
If you have any questions about legal documents or transactional procedures, do not hesitate to contact our team of notaries* at 1 866 387-7677 or a notary in private practice.
Response time
The first rule when you receive an offer to purchase—one that applies at all times—is to agree on a response time with the buyer. It may be preferable not to immediately accept an offer, either verbally or in writing. Give yourself some reflection time to consider the offer or to compare all the offers made.
Mortgage preapproval
When you have several potential buyers willing to increase their offer, it is in your best interest to ask them for a letter stating that they have been prequalified for a mortgage. It proves they are able to pay the amount you’re asking for. It’s an excellent way to prequalify them and verify that they are serious buyers.
Make a decision
Once you’ve received your offers, all you have to do is choose which one (if any) best meets your needs, and then give your buyer the good news. You can then inform the non-selected buyers of your decision. Since sales don’t always go according to plan, ask the non-selected buyers whether they want to be advised if the accepted offer falls through at any point.
Finally, if you accept an offer to purchase that has been raised, keep verbal or written proof of the changes made. The initial offer and this proof of increase will form a single contract. Otherwise, it is possible to fill out a new form containing all the terms of the new agreement.
Learn more in The offer to purchase article.
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