If you’ve been paying any attention to the real estate market this past few months, you’ve no doubt heard crazy stories about multiple offers. People paying several thousand dollars over list price, waiving inspections, offering to pay the listing agent’s fees, and much more. Due to continued limited listing inventory, many more properties than ever before are winding up in multiple offer situations. And yet, you may be surprised to learn that the last five buyers that I have represented this year have all acquired properties at or below list price. How is this possible?
As Mr. Miyagi said in “The Karate Kid”, the best way to avoid a punch is not to be there. So I have adopted strategies with my clients designed to avoid multiple offers. Here are some ways I’ve been able to save my clients time, effort, and money in this market.
- Being creative about criteria for a home: First of all, I want to mention that not all properties are selling in multiple offers. Rather, well-priced, “show ready” homes (i.e. homes that are renovated, updated, clean, and well-advertised) in popular areas are selling in multiples. Homes that aren’t in the hottest areas, or aren’t updated, need repairs, or are over-priced are not selling and are staying on the market. Knowing that, I ask my buyers to get real about how much they are willing to spend on their criteria for a home.
For example, knowing that completely renovated homes are selling for 7-10% above list price on average, is paying that premium worth it to the buyer? Or could they live with an outdated kitchen or bathroom for a year or two knowing they could make the same renovations at a fraction of the price.
- Not chasing the newest listings: The hottest listings in this market are selling within the first 7-10 days of being listed and always follow the same pattern. They list mid-week, receive multiple offers within days, call a highest and best deadline (i.e. a time when all offers are due), and then choose the strongest offer among many. Properties that last past the first week usually are over-priced or not well marketed. This creates an opportunity for a buyer to come in with a strong offer and snatch these properties up without competition.
My buyers are encouraged not to look at homes that are brand new to market. It means they may not see as many properties, but a little patience goes a long way.
- Buying homes before they list: There are many sellers right now who would list their home but aren’t doing so for a number of reasons. They don’t want to do all the repairs and cleaning to get their property ready for sale. They worry they won’t be able to find a property to purchase. And many more. This creates an opportunity for a buyer who is willing to solve these problems for a potential seller. Are you willing to take on required repairs, or be flexible about a closing date? If you can give the sellers what they need, they may give you what you want.
This sort of strategy again requires patience and diligence by you and your agent. But it can have big payoffs since you will be the only one competing for a property.