In the past month, we have found ourselves in two multiple offer situations. In one case, there were three offers on one home.
Before the real estate market took a nose dive back in 2008, multiple offers were fairly common. So were higher listing prices, higher selling prices, and fewer days on market. Things were different then and while I don’t think we’ll see the “hey day” of 2006 again any time soon, I see definite signs of a shift in the market. Homes are selling for more and the number of days on market is getting shorter. Even so, it’s been many years since we’ve been in a situation with multiple offers and now it’s happened twice in the past month. What the heck is going on here?
Personally, I’m not a fan of multiple offers. Homes can end up selling for more than any reasonable comp which means buyers can end up paying more than they really should. In most cases the seller has the edge but it’s a tricky situation no matter what side you are on.
So what should you do? What are the pit falls to avoid?
If you are a seller, it is admittedly a “luxury” problem to have. If your home has been priced right and marketed properly, you should expect to get offers. If you have multiple offers and they are close how do you choose? My first piece of advice to any seller is to remember that just because you have more than one buyer presenting an offer doesn’t guarantee you will end up with either. Demand too much from buyers and they could just walk away. More than likely, the buyer has been looking at other homes and if yours doesn’t work out, most buyers we work with have a plan B. So compares all offers, but be fair because an offer doesn’t guarantee a closing. Look at all aspects of the offer, not just the price. Is one offer cash and the other contingent on financing? Does one offer have a 45 day closing and the other has 60? Is either buyer asking you to pay their closing costs or include furniture in the deal? There many twists and turns in an offer so make sure your Realtor explains them all. If you just can’t decide or if neither offer is entirely to your liking, you can respond to the buyers with a request for their “highest and best offer”. But be careful. The offer you got may have been their highest and best, or they decide they don’t want to be in a bidding war and one or both could walk away from the deal all together.
If you are a buyer, our advice is simple. Get your financing in order before you start looking at homes so you don’t waste any time. If you know you’re going to need a loan, get pre approved before you even start looking. If you are paying cash, make sure you have quick, easy access to it. A cash deal and quick closing is usually music to any seller’s ear. If you find the home of your dreams but you learn there is another offer on the table give it your best shot, but be prepared to walk away. This is not the situation where you can get on the dance floor with a low offer and hope to negotiate to a figure somewhere in the middle. Make your offer as attractive as possible from the start, but know your limits. If you’ve ever been to an auction and bid on something you really want, you understand that sense of urgency and competitiveness that comes over you when that guy on the other side of the room is also bidding on that same item. Don’t fall into that trap. Know what your budget is including the cost of making any repairs, and stick to that. All that being said, the biggest shift I’m seeing is that good homes that are priced right don’t stay on the market long so be prepared to act quickly if you know this is the home for you.
Is this a good time to sell? Is it still a buyer’s market? For more information about what is going on the market here in western North Carolina, give us a call.