In a time where there’s a relative lack of new listings and an abundance of active buyers, sellers are often generating multiple offers on their home.
Depending on the market you’re working in, multiple offer scenarios can vary greatly. In some cities multiple offers may dictate a home selling for $20,000, $30,000 and even more than $100,000 above asking price, whereas in another city, multiple offers may generally only see a home selling for a few thousand over asking.
If you’re a Realtor who serves a large area you may experience all possibilities; for instance, agents in the Greater Toronto Area often deal with this current issue of variability.
Regardless of your service area, you should have a serious discussion with your buyers prior to viewing their first home and explain to them the current market conditions and how it may impact their buying power.
It’s no secret many buyers act on emotion, so it’s partly our reasonability to help them stick with their personal plan. Don’t be greedy and encourage them to overspend and stretch their means.
Further, explain to them that they may “lose” in multiple offers and educate your clients on various strategies that can be employed to help increase their chances of “winning.”
In many cases we can do a reasonable job at predicting how a multiple offer situation may unfold. For example, some markets may dictate a general rule that for every additional offer the price will rise $5,000 to $7,000, so we can guesstimate what a winning offer may look like.
If you analyze trends through your local MLS, while weeding out outliers, you may start to notice a pattern.
In addition to price, some buyers are encouraged to waive home inspections, financing conditions, etc.
Although most agents would probably agree that this is not ideal for our clients, sometimes it is necessary. If you encourage this approach, make sure your clients fully understand the potential ramifications and definitely ensure their finances are in order ahead of time.