The real estate market is moving at a rapid pace and once again, multiple offers are a common occurrence on new listings that are priced at or below market value. Sellers love them, and buyers hate them.
Over the weekend, I showed a house the first day on the market and there were already 10 agent business cards in the house, from showings before mine. By the end of the day, at least one offer was received, and the agent called for highest and best offers by the end of the next day. My client loved it and submitted an offer $35,000 over the list price. No word yet if it was good enough.
Another one of my buyers has been looking for a while and they need to sell their home in order to buy, but they want to find a home first because they have very specific desires in a home, and they fear they will sell their home and not find what they want. Every home they like sells in the first day or two and the sellers won’t accept a contingency for the sale of their home. They are now exploring other financial options.
One of my listings sold in multiple offers for 10,000 over the appraised value, and the buyers couldn’t afford to make up the difference, so the sellers dropped their price to match the appraisal. All the offers the sellers received, included seller paid closing costs for the buyers. It was a first-time home buyer house and none of the buyers had the cash to pay their own closing costs or make up the difference between the offer price and the appraised value.
Many buyers are so tired of losing in multiple offers that they are offering the maximum amount they can afford, regardless of value and they are not including an inspection contingency, which can be extremely risky. Some buyers are purchasing a Home Warranty in lieu of the inspection, which provides some protection, but doesn’t replace an inspection, in my opinion.
It is common for buyers to be first into a new listing, submit an offer right away, only to have the listing agent and sellers wait for several days to collect as many offers as possible before they review them. Some buyers will withdraw their offers as they don’t want to be in a bidding war or they may put a deadline for a response to their offer.
The Minnesota Realtors® approved listing agreement, asks the seller to decide if multiple offers shall be disclosed to the buyers or not. Most people think you should disclose multiple offers to create a bidding war and drive the price up, but it doesn’t always work that way. There are buyers that don’t want to be in a bidding war and there have been cases where disclosing multiple offers has chased all the buyers away and the seller had no offers on the home, which increased the marketing time.
An experienced real estate agent can provide you with a market analysis on the home you want to purchase so you can make an educated decision on how much to offer in a multiple offer situation.
Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to firstname.lastname@example.org. All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.