Buyers in this market are forced to deal with low inventory, increased competition, and yes, multiple offer situations. Many buyers, and agents, dread the multiple counter email they get requesting their buyer’s “best and final”.
Well fear no more! I have put together a 3-part blog series that will discuss in detail a few of the many things that you can do to position yourself above the competition, strategies that have been incredibly successful for me and my clients.
Tip #1 – A list price is an arbitrary price and often has nothing to do with current market value.
First and foremost, you must know your market, recent comparable sales (comps), current competition (active inventory), and target price. Educating my clients that a list price is an arbitrary price set by the seller/agent is the first part of this equation. You must look at comps and know their specific condition to really get an accurate picture of what a home’s market price truly is and what it should sell for.
A list price is often set low on purpose as a strategy to create a feeding frenzy resulting in a bidding war. Alternatively, some listings are overpriced, and as a result they usually sit until the sellers do an accurate price reduction, or accept a lower offer.
Understandably buyers new to the market are hesitant to bid way over a “list price”, thinking they are over-paying when sometimes the home was just under priced to begin with. You must have a good understanding of what the home should sell for prior to making your offer by knowing the competition. Market experience and knowledge from touring, previous offers on comparable homes, current inventory, and networking with colleagues, is invaluable when determining current market value for an agent. It’s my job to make sure my clients are up to speed and receive this valuable information.
In addition to understanding the current comps and what a target price for the home should be, buyers and their agent should have a plan and a strategy if it does turn into a bidding war. This usually gets discussed after the fact when they receive a multiple counter offer, but I believe it’s essential to discuss beforehand so the buyers feel more prepared, less nervous, and ready to make a clear decision.
In Part 2 of this series we’ll talk about 3 specific items your offer must include if you’re going to compete in a multiple offer situation.