Why are there so many multiple offers on homes?
Over the past few years, we have seen the number of homes for sale dwindling. The demand for homes remained the same, or even rose as our city is growing by leaps and bounds. Once inventory was very low, sellers started not wanting to sell their homes anymore due to fear that they will not be able to find a home or afford a home to purchase if they stayed in the city. This accelerated the dwindling numbers of homes for sale.
Colorado Springs has about 470,000 residents, and barely 1500 homes for sale. Of these 1500 homes, there are only
- 43 homes priced at 200K or less
- 259 homes are between 201K and 300K
- 704 homes are between 301K and 500K.
This means, especially if you are shopping 200K you are facing stiff competition!
The price of the home usually determines the strategy that agents deploy to arrange showings. It seems that in nearly all listings under $300,000, listing agents applying a “deferred showing” strategy. This means that listing agents activate the listing in the MLS (Multiple Listing Service), lets say, on Monday or Tuesday but do not open the showings until the following Saturday.
Professionals have split opinions about this practice, partially depending on whether they are the listing or buyers agent.
On one side, it can level the playing field as showings start for everyone at the same time. Example: A home is being listed on a Tuesday, but buyers just can’t see the home until 2 days later. With a deferred showing this gives buyers enough time to arrange for a showing and make time to go….and pretty much guarantees multiple offers.
On the other side, buyers who can’t make it on the dedicated showing times might feel disadvantaged, because they can’t see the property.
Regardless of which strategy is chosen, the process, due to the sheer amount of showings, particularly in the lower price ranges is tough for all sides.
As a buyers agent, I do prefer to have deferred showings, giving my buyers time to go and see the home, or for me to plan the preview and Facetime with out of town buyers.
Don’t feel like competing?
I have heard that many times:
“I am not a multiple offers kind of guy”
“I just don’t like multiple offers”
You might want to rethink that. Just give it your best shot! There ARE emotions, clearly,when you gave it your all, you’ll have to let the “universe” take over.
Make your offer as high as you can, as clean as possible and provide flexibility for the seller, to accommodate any of the sellers requirements. I have seen that in some cases sellers chose a lower offer, because the buyer was able to accommodate the seller.
Note: Chances are, if one of your competing offers is a cash offer, you’ll draw the short end of the stick and lose. Most sellers prefer cash, since closing can happen quickly and an appraisal is not required. It’s just really appealing.
Making the offer
In many cases agents are allowing a few days for showing but do determine a day and time when the agent will present all received offers to the agent. Make it an easy, clean, non contingent offer, with – many times -above list price.
A smart agent will submit a lender letter, proving that the buyer is well qualified to purchase the home, with the offer. Many times an agent will also provide a personal buyers letter with the offer, appealing to the sellers heartstrings by trying to create a connection with the seller.
What I think is more important is to ensure and show the seller that you are a non-nonsense buyer: you will not nickel and dime the seller, and no chance of buyers remorse (partly because this is your 8th offer and you are ready to just “get” a home).
After that, cross your fingers.
Submitting your offer
As previously mentioned, agents recently have more frequently offered a showing period, and then determined an acceptance deadline right after. This acceptance deadline is not written in stone and we have lost out on homes because the buyer waited too long to decide on offering. While it would have been within the stated deadline time, the seller simply chose to review and accept an offer at an earlier time. Best practice is to make an offer with few contingencies and to submit this offer as soon as you decide that this might be a home for you.
Waiting to hear
Its a fairly hot debate among agents, how offering agents should be informed about the non acceptance of their offer, and how long the agents should have to wait. Imagine you viewed a home on Saturday, like it, and make an offer. However, the listing agent stated that the offer will not be reviewed until Monday or Tuesday. Having an acceptance deadline that far away prevents buyers, who will not have their offer accepted, to make an offer on another home.
As the buyers agent you can only call the listing agent and inquire about where their own submitted offer falls. Is it at the bottom, middle or top? The listing agent would be able to determine that pretty quickly. However, not all agents reply to phone calls. Sometimes, it’s because they are simply overwhelmed (which means they should really get help in order to work in this industry with dignity) and sometimes they determine they just don’t WANT to reply. Yes, all those scenarios happen.
It’s not over, when it’s over
This applies particularly, if your offer was in the top 2 or three offers and you lost out in the multiple offer competition. Consider making a backup offer – even if the winning offer was a cash offer. This means that you write up a new offer, stating that the seller will move forward with your offer without putting the home back on the market, should the first offer fall through. You don’t have anything to lose.
There is buyers remorse. After having gotten into a bidding frenzy and the craziness is settling down for a moment, buyers maybe realizing that things have gotten out of hand and wonder if the home is worth all this money. However, I am not seeing it as much this year as I saw it last year. Homes are coming back on the market off and on, so you want to make sure that YOU are next in line, without starting the showing process all over again, and without having to compete again. Some agents allow back up offers (though they are really not the ones to decide), and some don’t.
Whatever happens, this market takes strong buyers nerves and a great, pro active agent. If you have one, listen to their suggestions. If you don’t want it badly enough, don’t offer. It’s just too stressful. If you need an agent to guide you through this, give me a call. 719-321-0800