Hmmm. How odd. Buyers competing with other buyers? In what’s supposed to be a no holds barred Buyer’s Market? You know, the kind of market where buyers call all the shots. And have their pick of the listing litter whenever they deign to bestow a little largesse on those woeful sellers, all addressed up, waiting to dance.
And yet…,.we’re seeing multiple offers flying right and left, at least in some parts of this peculiar market. What’s that all about? It flies in the face of everything we thought we knew about how a Buyer’s Market is supposed to act. But then, these are interesting times, aren’t they? As the oft-quoted Chinese curse says: “May you live (and buy) in interesting times.”
Before we get too far into the mysterious multiple personalities that come part and parcel with multiple offers in a Buyers’ Market, let’s spend a column strolling down memory lane. Let’s harken back to those thrilling days of yesteryear – when it was a Seller’s Market and there was nary a care in the world. Money grew on trees and competing buyers were the staple that everyone else was feasting on.
If you were a listing agent back in 1988-1989, 1999-2000 or 2004-2005, you knew, unquestioningly, with every fiber of your real estate body, that even if your first escrow fell out, due to fate or bad luck or even a buyer’s bad behavior, there would always be another one waiting in the wings.
For every offer, there were 4 or 5 or 20 others right behind it. Buyers tripping over buyers to get into back-up position. Every listing was on the gold standard. A veritable stash of krugerrands buried in the back yard. You didn’t worry about counting your commission before you had it because every listing – good, bad or ugly – sold. The key to success was to get the listing in the first place They were all done deals.
Here’s to a rapidly appreciating market! It cures all ills. Glosses over all imperfections. Makes every boo boo feel better. Nothing can go wrong…until of course, everything goes wrong.
Working with buyers in a Seller’s Market? That was another story. You put your time in. Often endless hours. Showing countless numbers of properties. Rushing to get to them quickly when they first hit the market. Beating the rest of the hungry hordes flocking to the blue light special. Writing offers on properties your client didn’t stand a snowball’s chance of getting – mostly because they just weren’t ready to step up and pay what the market insisted they pay and in the end… made them pay.
Sometimes it took 3 or 4 failed multiple offer situations for a buyer to finally get it. For the light bulb to go on. They really couldn’t negotiate. The market wasn’t going to let them. This wasn’t Burger King and they couldn’t just walk in off the street and expect to have it their way a la carte. If they wanted to buy something, anything, the capitulation had to come from the buyer’s side of the coin (lots of coin).
The challenge for every buyer was in his own head. The true negotiation was with himself. How much could he ultimately convince himself to pay for a place? How much could he trick himself into taking on? Whatever he thought his limit was, the highest price he could possibly afford …it always took more. And more. And then … just a little more.
It was The Big Squeeze. Not only did buyers routinely start with more than full price and bid-up from there, they were also pressed for time. They careened crazily through escrow with incredibly short contingency periods. After working so hard to get into contract, they were afraid of what might happen if they didn’t hit every single mark, in perfect sync, along the way. Inevitably, there was always something unexpected that came up. A bump in the road or in the interest rates at the last minute. An extra closing cost popping up out of nowhere. An inspection issue that no one really anticipated. Ca-ching. The adding machine just kept adding it up and piling it on.
Buyers had to talk themselves into accepting it. Dealing with it. Working around it. Putting up with it until it could all be fixed down the line, with a tiny piece of that pot of gold that was going to be theirs, waiting at the end of the rainbow. It wasn’t that buyer’s remorse didn’t happen back then. It was just that it was so much easier to swallow. The gestalt of the times was cramming it down every one’s throat. The whole object was to buy something. To get into the market at any and all cost. Because it was only by getting into the market that you got a chance to be a seller too.
So next week, let’s explore how utterly strange this phenomenon of multiple offers can get when it happens right in the heart of a market teeming with buyer’s remorse. Who wins? Who loses? Who capitulates now?