We’ve spent quite a bit of time in recent columns getting psyched-up to enter the multiple-offer marketplace. Wrapping our hearts and minds around the whole unseemly idea of competing for a house! Putting our game faces on. Preparing for the rigors of what feels like a completely random and arbitrary process.
So now what? Are we ready to make an offer?
I can hear them now. Those thousands of questions that begin to spill-out of the average Buyer’s brainpan when they finally find a place – only to discover that they share the same dream home dream with some unknown number of other nameless, faceless stranger/buyers ready to go after it too.
Questions like: Should I make an offer right away? Do I come in at full price? Slightly above? Slightly below? I don’t want to offer more than I have to? I won’t lose it for a couple thousand dollars will I? How do I know there really are other offers? Do they have to tell us what the other offers are? What if I offer full price – don’t they have to take it? How quickly will they respond? If I’ve got all-cash – can I offer $50,000 less? Will they just accept the best offer? Will they counter all the offers? Are they going to force me to spend more than I can afford?
First things first. Slow down. Quiet all the voices in your inner-ear that are spinning you around, throwing you off-balance. This multiple-offer thing is a many-headed hydra and it takes a while to grok the full gestalt. Sometimes you even have to go through a couple of losing battles before you really get the hang of it.
I wish I could tell you there was an off-the-shelf, multiple-offer paint-by-the numbers kit that allowed everyone to fill in the blanks in rational, linear, step by step fashion in a way that made the bigger picture simply emerge with absolute clarity.
It doesn’t work like that of course. Every offer situation is different. We are dealing with the vagaries of human nature here. As such, for every rational move made there’s an equal measure of intuitive feel and educated guesswork that goes into the mix.
Heck, if it were too easy, that would take all the excruciating fun out of the process. No more tortured introspection and obsessive observation of all the subtle nuances. Well….maybe that’s just me.
In the end…is it just luck that decides who gets it? Maybe a little. But what we are talking about is upping your odds of success by learning how to think strategically rather than just tossing your hat into the ring in helter-skelter fashion. If you launch into the process without any overview or an Agent who has never been in a multiple-offer situation before, your odds of success just went radically down.
Here’s a few basic things to know:
– If the average Seller gets a full price offer on the first day their first response will probably be: “ I knew I priced it too low. I’m leaving money on the table!”
– If the average Buyer makes an offer that gets accepted by a Seller right off the bat with no counter offer, that Buyer immediately thinks: “I offered too much! I coulda got it for less!!”
The market doesn’t lie. It is an incredibly honest feedback mechanism. Kind of an ongoing, up to the minute Nielsen Survey or impromptu political polling device. All kinds of people – different ages, demographics and desires – get together to issue collective judgment on each new listing that comes on the market. If ten different Buyers want to buy it on the first day – then the jury has rendered a decisive verdict. If no one wants to buy it in the first two months, the jury is deadlocked and is sending a very different message in no uncertain terms.
Success in multiple-offer land is about Buyers and Sellers listening carefully to what the market has to tell them. And a strategic approach to multiple offers makes important assessments based on two primary criteria: 1) the number of other offers lined up in the multiple offer queue 2) the length of time it takes for the queue to form.
You make a different offer when you are competing with one other Buyer as opposed to ten. And you make a different offer if it’s the first day on the market as opposed to a month later.