These days,
every agent with a pulse has stories about losing homes in multiple offer
situations. With inventory at a 28-year
low and buyers flooding the market, this isn’t news. Over the past five years, we have progressed
from a dead market… to a cautious market… to a logical market… to an emotional
market. Most buyers are no longer
shopping for homes, they are fighting for them.
Having said
that, buyers need to know that there really are no set rules for multiple offer
situations. While Realtors subscribe to
NAR’s code of ethics (which promote fairness and integrity in all dealings),
many others are simply in combat mode, looking to lock down the best offer
regardless of whose feelings get hurt along the way.
Most buyers
would like to believe there is an orderly, systematic protocol for dealing with
multiple offers. There isn’t one. In many cases, the listing agent makes it up.
Submitting a
reasonable offer in hopes of eventually negotiating a fair deal is so
2011.
Today, I
advise my buyers to fire their best shot immediately, eliminating as many
contingencies as they comfortably can eliminate, with the highest down payment
and strongest lender letter possible.
Sometimes we let earnest money go “hard” and become non-refundable early
on in the process, so sellers know we are dead serious.
It’s those
types of offers… the ones that show serious motivation, creative presentation
and thoughtful negotiation… that are getting accepted.
As an agent,
I have been told many times when I’ve submitted an offer that the listing agent
will get back to me if other offers materialize before we’ve come to
agreement. Sometimes they do, sometimes
they don’t.
I have been
told before that the seller will set a future deadline (noon on Wednesday, for
example) for reviewing offers, only to find that by
Tuesday night, the home is under contract. Sorry, you lose.
I’ve had
agents tell me verbally this year that my offer was being accepted… only to
wait hours for a signed contract that never comes back.
There is
also the growing issue of so-called “pocket listings”, where agents take
listings but don’t immediately put the property in the MLS in hopes of finding
the buyer on their own (which allows them to “double-end” the sale and collect both
sides of the commission).
The bottom
line is that this marketplace is a battlefield, and if your agent isn't advising
you on how to compete, chances are you are going to lose.
With home
prices in many areas of town rising 1% per month, time is money. The recent increase in interest rates, coupled with prices that continue to rise, means that buyers who continue to shop for months and months are ending up with less house and higher payments.
This is not an orderly market. Urgency is in. Strategy matters. If you're a buyer, sooner is most definitely better than later when it comes to buying a house. Prepare to compete.
