Close to 50% of home buyers experience some type of buyer’s remorse after they sign a purchase agreement and because of that, many sales don’t close. I see this frequently when a buyer wins in multiple offers.
Inventory is so low that many buyers make offers on properties only to lose to another buyer. I have heard of some buyers losing out five or more times.
The one level townhome market is in extremely high demand as there are so many baby boomers looking to downsize.
One of my clients looked at15 townhomes the first day they went on the market. The first few that she liked, she missed out on because she wanted to think about it over night and they were sold the next day.
Finally, we submitted a cash offer on a townhome the first day on the market for $15,000 over list the price. The listing agent said she wouldn’t present the offer to the sellers for 3 days as they were trying to get multiple offers. My client’s offer was too low, and she didn’t win.
We looked at another property that was $20,000 over her budget. She loved it but decided she couldn’t afford it. A week later the seller dropped the price $20,000 and we went back to look at it again. It was in excellent condition, a great location, and it had everything on her check list. She decided to offer $5000 over the list price and the seller accepted her offer.
It is up to the seller to decide if the listing agent discloses multiple offers or not, most of the time the listing agent will say “highest and best offers are due by a certain date”. In a fast market you must assume you will be in multiple offers even if it isn’t disclosed. Once a buyer submits an offer, the seller can continue to consider more offers until the purchase agreement is fully executed and delivered to the buyer.
When buyers ask me how high over the list price they should go, I give them a market analysis on the property, so they know the neighboring values, and I suggest that they compare it to the other properties they have seen, and offer enough so that if they lose it, they won’t say I should have bid higher. I also tell them if they win they need to be prepared for buyer’s remorse, as they may feel they overpaid, not knowing how high the other bids were.
When I met my client at the inspection, the first thing she said to me was she thought she paid too much. We completed the inspection and she felt good again, about the investment as the inspection report was excellent.
An experienced real estate agent can help you determine the best offer to submit in a seller’s market.
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.