Why are there so many multiple offers on homes?
Over the past few years, we have seen the number of homes for sale dwindling. The demand for homes remained the same, or even rose as our city is growing by leaps and bounds. As soon as inventory was very low, potential sellers were less willing to sell their homes because they worried they would not be able to find an affordable home to purchase if they stayed in the city. This accelerated the dwindling inventory of homes for sale.
Colorado Springs has about 470,000 residents, and barely 1500 homes for sale. Of these 1500 homes, there are only:
- 43 homes priced at 200K or less
- 259 homes are between 201K and 300K
- 704 homes are between 301K and 500K.
This means (especially if you are shopping in the 200K range) you are facing fierce competition!
The price of the home usually determines the strategy that agents deploy to arrange showings. It seems that in nearly all listings under $300,000, listing agents are applying a “deferred showing” strategy. This means that listing agents activate the listing in the MLS (Multiple Listing Service), lets say, on Monday or Tuesday but do not open the showings until the following Saturday.
Real estate professionals have split opinions about this practice, depending on whether they are the listing or buyers agent.
On one side, it can level the playing field as showings start for everyone at the same time. Example: A home is being listed on a Tuesday, but buyers just can’t see the home until 2 days later. With a deferred showing this gives buyers enough time to arrange for a showing and make time to go. This also pretty much guarantees multiple offers.
On the other side, buyers who can’t make it on the dedicated showing times might feel disadvantaged because they can’t see the property.
Regardless of which strategy is chosen, the process creates a large amount of showings particularly in the lower price ranges. This makes it tough for all sides.
As a buyer’s agent, I do prefer to have deferred showings because it gives my buyers time to go and see the home, or for me to plan the preview and Facetime with out of town buyers.
Don’t feel like competing?
I have heard that many times:
“I am not a multiple offers kind of guy.”
“I just don’t like multiple offers.”
You might want to rethink that. Just give it your best shot! There ARE emotions when you gave it your all. You’ll have to let the “universe” take over.
Make your offer as high as you can, as clean as possible, provide flexibility for the seller, and accommodate any of the sellers requirements. I have seen that in some cases sellers chose a lower offer because the buyer was able to accommodate the seller.
Note: Usually a cash offer will win. Most sellers prefer cash because closing can happen quickly and an appraisal is not required. It’s just really appealing to the seller.
Making the offer
In many cases agents are allowing a few days for showings, but they determine a day and time when the agent will present all received offers for the house. Make it an easy, clean, non-contingent offer. Consider making an offer over list price.
A smart agent will submit a lender letter with the offer to prove that the buyer is well qualified to purchase the home. Many times an agent will also provide a personal buyer’s letter with the offer to appeal to the seller’s heartstrings by trying to create a connection with the seller.
What I think is more important is to assure the seller that you are a no-nonsense buyer: you will not nickel and dime the seller, and there is no chance of buyers remorse (partly because this is your 8th offer and you are ready to just “get” a home).
After that, cross your fingers.
Submitting your offer
As previously mentioned, agents have more frequently offered a showing period and then determined an acceptance deadline right after. This acceptance deadline is not written in stone and we have lost out on homes because the buyer waited too long to decide on offering. While it would have been within the stated deadline time, the seller simply chose to review and accept an offer at an earlier time. Best practice is to make an offer with few contingencies and to submit this offer as soon as you decide that this might be a home for you.
Waiting to hear
It’s a fairly hot debate among agents: the method in which offering agents should be informed about the non acceptance of their offer and how long the agents should have to wait. Imagine you viewed a home on Saturday and made an offer. However, the listing agent stated that the offer will not be reviewed until Monday or Tuesday. Having an acceptance deadline that far away prevents buyers (who might not have their offer accepted) from making an offer on another home.
As the buyer’s agent, you can only call the listing agent and inquire about where their own submitted offer falls. Is it at the bottom, middle or top? The listing agent would be able to determine that pretty quickly. However, not all agents reply to phone calls. Sometimes, it’s because they are simply overwhelmed and sometimes they determine they just don’t WANT to reply. Yes, all those scenarios happen.
It’s not over, when it’s over
This applies particularly if your offer was in the top 2 or 3 offers and you lost out in the multiple offer competition. Consider making a backup offer even if the winning offer was a cash offer. This means that you write up a new offer stating that if the first offer falls through, the seller will move forward with your offer without putting the home back on the market. You don’t have anything to lose.
There is buyer’s remorse. After being in a bidding frenzy and the craziness settles down for a moment, buyers sometimes realize that things got out of hand and wonder if the home is worth all this money. Homes are sometimes coming back on the market, so you want to make sure that YOU are next in line without starting the showing process and bidding again. Some agents allow back up offers and some don’t.
Whatever happens, this market takes strong buyer’s nerves and a great, proactive agent. If you have one, listen to their suggestions. If you don’t want it badly enough, don’t offer. It’s just too stressful. If you need an agent to guide you through this, give me a call (719-321-0800) or click the picture below to schedule a free 30 minute Q&A call.