Are you familiar with this phrase on MLS listings?
“Offers, If Any.”
Just as the “48 Hours Irrevocable” phrase was big in the 2017 Fall market, I think the old “Offers, If Any” is going to be huge this spring.
Let’s take a look at what it means, what it’s meant in the past, and how much confusion it can cause…
There are two things that today’s blog will not be:
1) About mortgages
2) Over 3,000 words
It’s funny – when I first started this blog back in 2007, the people helping me with it told me, “Blogs should be about 200-300 words,” and also added, “It’s something you should really try to update at least once per week.”
My first blog post ever was 449 words, including the intro.
The body of the post itself was five paragraphs.
Call me crazy, but that’s not enough to explore ANY topic on the planet.
And while I know that brevity isn’t my strong suit, I also find many articles out there today to be lacking.
Even in the major newspapers, I find myself scrolling down, and thinking, “That’s it?” The articles never really seem to do the headlines justice.
In any event, the year-end 2017 blog posts, 2018 predictions, and hot topics regarding mortgage and debt seemed to really get my fingers flaming, but from now on, we’re back to the norm.
The 2018 market hasn’t really “started” yet, per se.
It’s taking time to develop; a lot more than it did last year!
To have a market, you need interactions between buyers and sellers, and you need sales.
So far, we have minimal new listings. And I said “new,” FYI. Yes, there are a slew of active listings, but of the 1,714 freehold properties listed for sale, only 325 of them, or 19%, were listed in 2018.
A handful of properties have sold, and I’ve seen the first “bidding war” erupt with 16 offers on a west-end condo last week, but there still aren’t nearly enough sales to come to any conclusions about how the market is starting.
In 2017, it was somewhere around the third week of January when I turned to a colleague and said, “Something is really strange with this market.” All the sub-$1M freeholds were selling with bully offers, and the market had this unreal upward momentum.
In 2018 thus far, I can’t even give you an opinion on where we are in this market, and I think I’ll need a full month of data, and experience, to (TK)
So that brings me to this concept of “Offers, If Any.”
Let me show you what I mean:
It’s simple enough, right?
It’s like saying, “If we have any offers, we’ll review them at this time, at this place, and we ask that if you register an offer, you do so by 5pm.”
Unless I were making this into its own blog post, you’d simply read the above, and wouldn’t think anything of it.
But the presence of those two words, “if any” after the word “offers,” can be a game-changer in this market. It’s strategic in nature, and it can make everything abundantly clear, or completely muddy the waters.
The phrase “Offers, If Any” has been on MLS listings for years, but before this year, it was didn’t really mean what it suggested.
The idea that there would not be offers, ie. the presence of “if any,” was so far-fetched in previous years, that the presence of “if any” was basically the listing agent rubbing it in your face.
Take a $900,000 property, that’s listed at $699,900 in February of 2017, which ultimately gets 28 offers and sells for $988,500.
“Offers, If Any,” the MLS listing reads.
And you’re thinking, “Oh, yeah, sure! If any, right? As though you won’t get offers?”
You used to see that on the listing, and you’d think the agent was being condescending.
This year, however, the words “if any” have meaning.
We’re only two weeks into the year, but I don’t think we’re going to see the same spring market we saw in 2017, or anywhere close to it.
As a result, the “under-listing” strategy (if you can call it a strategy), will be far from automatic.
The “real estate kiss of death,” as I have always referred to it, is listing your property for $999,000 with a hold-back on offers, not selling, and then re-listing the next day at $1,200,000.
I have done that exactly once in my fourteen years.
I wrote several blogs about “listing and re-listing” in the spring of 2017. You can read one from May HERE.
But the 2017 listing-and-re-listing was because the market changed overnight in April, and through May, sellers had yet to adjust – both to the new listing strategies, as well as the decrease in price.
In 2018, listing and re-listing is going to be a killer.
And thus it’s up to the seller, and the listing agent, to assess risk tolerance, and enact a strategy.
Let’s say you have a house that is worth $900,000.
There are three listing strategies that you can enact in 2018, as I see it:
1) List at $899,900, offers any time.
2) List at $899,900, hold back offers.
3) List at $799,900, hold back offers.
And each of those listing strategies could have its own subset of strategies.
Take #1 for example:
1a) List at $899,900, offers any time, with 24 hour irrevocable (or 48 hours, if you want). We call this the “soft holdback,” and it was prevalent in the Fall of 2017.
1b) List at $899,900, offers really, truly, any time.
1c) List at $919,900, thus over-pricing as the house is “worth” $900,000, but you want to know for certain that you’re not leaving money on the table.
As far as #3 goes, it’s risky!
If you don’t get the response you need in order to push the $799,900 list price up over the $900,000 value of the home, then you have no choice but to re-list higher, and incur the “real estate kiss of death.”
If the market is truly balanced this spring, then a lot of buyers will feel as though they don’t need to “play the games,” and the seller who under-lists, terminates, and then re-lists, risks offending the buyer pool.
To get that $900,000 offer, based on a $799,900 list price, you might have only needed two offers in some years, or at the very least, three. But what will it take in the spring of 2018? Four offers? Five? Time will tell.
As far as #2 goes, this is where the 2018 market will be interesting.
I know this sounds crazy (I’m being facetious…) but maybe, just maybe, listing at fair market value will become a “thing” in 2018.
It’s almost a chicken-and-egg situation.
What are you deciding on first when listing: whether or not to hold back offers, or the price?
Do you start with, “We’re going to hold back offers, now do we list at $899,900, or $799,900?”
Or do you start with, “We’re going to list at $899,900, no do we hold back offers?”
As I said, this is where the 2018 market will be interesting.
And it’s where those words “If Any” come into play.
The agent and seller who want to list at fair market value, but still want to try holding-back offers “just in case,” will write on the listing, “Offers, If Any.”
They want to signal to the market that they’re not under-priced for competition, and they don’t want to scare buyers away.
They want to ensure that buyers know this isn’t the spring of 2017, and houses won’t sell for 150% of the list price – especially this one!
So the “If Any” is really saying what it means. “We’re priced at $899,900, which we think is reasonable. And if we get any offers, we’ll review them at this date.”
How else can you convey that to the buyer pool?
I mentioned something above about “muddy waters,” and if you’re with me on this blog so far, you already know where this is going.
The listing for that $900,000 house, with a $799,000 list price, might say, “Offers Reviewed Monday January 15th at 7:30pm.”
But it might also read “Offers, If Any, Reviewed Monday January 15th at 7:30pm.”
So what I’m getting at is, there’s nothing to stop a listing agent from trying to trick the buyer pool, once they think they’ve got it all figured out, into thinking a property is fairly-priced, when it’s not.
What else is new?
As it always has been, it’s up to the buyer to do their homework, use comparable sales, and determine what they think fair market value is.
It’s too bad, because right when you think there’s some clarity in the market, you realize, there isn’t.
Personally, I think we’re going to see a lot more properties this spring listed at fair market value, rather than being stupidly under-listed like they were last year. I just don’t think sellers will have the risk tolerance, and if they’re smart, they’ll think about this before listing, rather than acting surprised – and hard-done-by, when the strategy fails.
I think listing at fair market value is the way to go, or even slightly above fair market value, in lieu of holding-back offers.
It’s a decent strategy, when you think about it.
Real estate has no fixed value, and it’s not like a share of stock, where millions of the identical item trade every day, with values traced to the very penny.
So if you think you’ve got a $900,000 house, maybe you price at $924,900, and with “Offers Any Time,” the first few buyers that walk through the house and love it, decide to act right away, and come in at or near the list price, rather than risk losing out.
I would absolutely choose that strategy over listing at $699,900, and hoping I get 10-12 offers and $200,000+ over the list price.
So having said all this, what do you think: is it going to be tougher this spring to be a buyer, or a seller?
As many readers have pointed out, last spring, you could list a beat-up RV for sale and you’d get multiple offers.
So will it be harder for sellers to analyze, implement, and follow the right listing strategy? Or will it be harder for buyers to cut through the pricing games and listing inconsistencies, which are designed to be easier than in 2017, but might end up being harder?
It’s too early to tell, but we’re getting there, every-so-slowly…