This is the 8th in a series about Multiple-Offer situations. How to think about them. How to approach them. And hopefully how to increase your chances of success when you find yourself staring down the barrel of one.
It started with 19 offers I received on a listing in March. Every week since, I’ve continued writing and observing other Multiple-Offer frays that have come up first hand along the way.
There was the 13-offer “steel cage match” my West Side Buyer-clients won. The 5-offer “Shake-down in Quake-town” that other Buyers survived. A recent 6-offer donnybrook that Sellers of mine took part in. And a few other minor skirmishes with 3-offers apiece.
Scratching the surface of these situations with a fine-toothed comb has sharpened my focus and conviction about the need for effective m.o./m.o’s (multiple offer modus operandi).
It’s also been quite apparent that some folks aren’t reading Real Estate of Mind on a regular basis. Buyers, Sellers, Agents that don’t seem to be getting it. I’m afraid they’re going to repeat the same mistakes over and over again. Just sayin’.
If you want the whole series of columns, e mail me and I’ll send ‘em for free. Some people actually pay money for this stuff.
But back to the “real” business at hand. Nothing is certain with multiple offers. Like so many other fundamental things in real estate – success with multiple-offers comes from listening carefully to what the market is telling you. From understanding and knowing what resources and strengths you bring to the table. And from recognizing your own weaknesses so you can navigate around them.
Every offer-scape on every property is different but a strategic approach to multiple-offers is usually based on two primary factors: 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.
In simplest terms: You make a very different offer when you are competing with one other Buyer as opposed to ten. And you make a very different offer if it’s the first day on the market as opposed to a month later.
The two basic models for offers people generally write are: 1) “the pre-emptive strike” and 2) “making it past the first cut”. There is actually a third kind – sort of a step-cousin to the “low-ball” offer. Since low offers don’t get very far in multiple offer land, they rarely count for much – except as extra leverage for the Seller. If Buyers don’t get an acceptance or at least a counter offer – because they offered too little – the rest is a moot point. They’ve already shot themselves in the foot.
The “ Pre-Emptive Strike is reserved for crazy-busy and obscenely- competitive markets. When things have reached a fevered-pitch and someone with enough resources decides they have to have a particular place or the world might end. Or… they might not get what they want. Which, for some people with lots of money, equates to the same thing.
It’s not exactly “an offer the Seller can’t refuse” with Marlin Brando making a cameo as the Buyer’s Broker. More like the kind of offer that a Seller might end up shooting himself over later if he doesn’t take it – i.e. – one that’s too good to take a chance on refusing.
These are usually all-cash. At amounts so far over list price and beyond initial Seller expectations that it blows everyone else away. The Seller is given a short time to respond. Take it or leave it. Accept it or take his chances with the rest of the market.
If apochryphal memory serves, there was a famous million dollar over-bid on a house in Palo Alto back in 1999 that sent champagne glasses clinking all over the Bay Area. That was a pre-emptive strike by someone who could really afford it.
Most of the rest of us mortals fall into the other category of offeror – as in – what’s the least amount of money I can offer and still have a chance. How much is too little?