Mulitple Offers in This Economy?
“There are a million homes for sale! What do you mean this property has multiple offers on it?!” says the buyer who just lost out on a home that had been for sale on the market for five months.
Welcome to our world these days. Yes, there are a ton of homes for sale on the market but the majority of them are being offered as ‘short sales’. If you’ve heard there’s 15 months of housing inventory on the market right now, take out the number of short sales and foreclosures out of the mix and we only have about 4 months of homes available. At least that’s my gut feeling lately after talking to fellow agents. For example, I was to show homes to a buyer who just relocated here from back east this past weekend. I pulled up his price range and area where he wanted to live and got 28 listings that matched. Of the 28, 19 were short sales-all of which each had at least two offers pending on them. Of the remaining 11, 6 were on main roads like 700 and 900 east. The buyer has a dog and didn’t want to live on a high traffic road. Of the 5 left to see, 4 were ‘so-so’ and only one kinda rocked his world. So, I wrote an offer for him and submitted it to the listing agent and we waited.
Within an hour that agent called to say another offer had come over and she was expecting a third offer later that day. My buyer, a virgin ‘first time buyer’ was a bit miffed when I called to tell him what was going on. He said, ‘I submitted first, so they have to deal with me first!’. Um, no. The seller can do what they want, really. The seller is looking to get the most money they can get from the sale of their home so of course they want to look at ALL offers.
The seller’s agent will most likely recommend to the lucky seller to do one of several things with the three offers:
1) put all the buyers agents on written notice that there are multiple offers and give them each 24-48 hours to re-write, up their offers or resubmit the same offers;
2) accept one offer and put the other two offers in back up position( if the back up buyers want to be in that position);
3) counter just one of the offers, or 4) reject all of the offers (because they were so low).
I find that most listing agents in a multiple offer situation will advise their seller(s) to put buyers agents on notice and give them time to put their ‘highest and best offer’ on the table before the seller(s) makes a decision. Its darned exciting for the seller and nerve wracking for the buyer(s) when there are multiple offers on a property. Recently two large apartment complexes were sold in Utah in the multi-million dollar range, and there were over 40 offers on each property before it sold to the highest bidder. There is also a way for the buyer to almost guarantee they get the property in a multiple offer situation, by writing in an escalation clause. But that’s a whole other blog!