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.
Last weekend I showed a couple a house that had been on the market less than 24 hours, and we found 3 other agents and their buyers looking at the house at the same time. My buyers loved the house and made an offer $26,000 over the list price. There were 10 offers on the house by the end of the weekend and it sold for more than $100,000 over the list price. The listing agent disclosed that he intentionally priced the house low to encourage a bidding war.
Another one of my buyers offered $11,000 over list price on a $240,000 property. She was a cash buyer and waived the inspection and she was also out bid.
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 of 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. Lately I have seen major defects found by the inspector such as leaky roofs, bad foundations, windows needing replacement, and rotted decks.
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 state 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 many buyers that don’t want to be in a bidding war and there have been cases where disclosing multiple offers has chased all of the buyers away and the seller had no offers on the home.
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.