There's how many offers?!

5/27/2013

It's been happening more and more this year that if one buyer likes a house, there happens to be another buyer out there who also likes it. In fact, both of these buyers make offers, as does another buyer, and maybe one more. Multiple offers are very common this season and it doesn't seem to matter if it's for a listing new on the market or several months on the market, multiples are popping up everywhere.  

What's the highest offer count you've ever heard of? 10 offers at one time for one listing? 20 offers? 25?

A month ago I showed a house in Farmington to my buyer. It was a brand new listing, bank owned, listed for $95,000. As we arrived for our showing, we saw a buyer leaving, another buyer walking up to the house, and another car parking across the street. During the time we were in the house, another 3 or so groups came and went. Sort of lost count.

The house was a quad level, unusual floor plan but good for an active family. It looked like it needed some repairs to flooring, plumbing, hand rail and possibly more, but my buyers liked it, so we put an offer together. The seller set a deadline for offer submissions for 3 days after our showing, and when we submitted our offer, there were 7 offers in. Because of all the paperwork involved with all the offers, it took the seller a few days to wade through it all, and when it was all said and done, what was the final accepted price? More than $140,000, which was more than $10,000 above my buyer's offer. 

There had been 50 offers. 50 showings in one week is pretty good, but 50 offers is fairly exceptional. What I found interesting was that 2 of the offers had been for less than list price. When you know that it will be competitive, you have to "go big to get the home", but it is hard to resist the "let's just see what the seller says". My buyer had made their best effort and were still in the upper-middle of the pack. 

How do you win in that kind of competitive situation? And an even more important question, how do you "win" without "losing" in the end? The trick is to offer an amount that a seller will accept, be more appealing than any other offer, and yet remain in your affordable range. And there's still the property inspections and repairs that loom as unknowns, so guessing everything right from the outset is truly a monumental task.

My advice to a buyer is to offer an amount that represents how much you want the house. Think of it this way, if another buyer offers $10 more than you, will you be satisfied that you gave it your best effort? And you'll let this other buyer get the house without kicking yourself? How much is it worth to you to get the house? When it comes to strategy, taking into account the days on market, number of price reductions, and pace of the market should heavily influence the price and terms you offer.