Let’s pretend for a moment that you’re a real estate agent and you currently have a listing.

Which of the following questions, if asked over and over by buyer agents, would frustrate you the most:

1) “What is your seller’s price expectation?”

2) “How many offers are you expecting?”

3) “What do you think the property is going to sell for?”

As I have written about in the past, I will rarely give a direct answer to any of the three of these questions.

Why?

Well, because I generally do things that increase my advantage, leverage, and the eventual sale price for the sellers who hired me.  Common sense, no?

We have talked at great length about the prevalent tactic in our market of under-pricing and how many inexperienced buyer agents have no clue what they’re doing and are left caught off guard when it comes to forecasting market value.

For one, it’s not my job to educate buyer agents on market value.  I will only if it’s to my sellers’ advantage.

Secondly, if I had a listing at $799,900 and I was expecting $1,000,000 or more, telling that directly to an inexperienced buyer agent who is planning to submit a garbage offer of $820,000 with three conditions will end up pushing him and his buyers away.  That means one less offer for my seller, which means less leverage, which means, potentially, a lower sale price.

Hate the game, not the player.

Plus, I don’t think I’m telling you anything new…

Sometimes, when I’m asked, “What is your seller’s expectation on price?” I’ll simply respond, “A lot.”  It’s a joke, but more than half of the agents give up and don’t ask the question again.

When asked, “What do I think the property is going to sell for?” I might answer, “Over the list price, I hope!”  It’s up to that buyer agent to reply, “No, seriously though.  Can you please give me a ballpark idea?”  Then, it’s up to me to decide if I want to or not.

I wrote a blog last month about how a listing agent and myself worked together, through honesty and transparency, to get a deal done.  He told me the exact price I needed to offer, and I brought it to him, as he was dealing with another difficult buyer in an offer situation that was going nowhere.

But that’s different.  I won’t rehash the blog, nor get into the TRB readers’ comments, but that situation is completely different and it allowed for that level of transparency because it helped both myself and the listing agent.

When you price artificially low and set an offer date, you need offer(s), plural.  Some, more, many.  And you can’t “help” buyer agents by telling them the property is going to sell for more than their buyers can afford, or you’ll be doing a disservice to your sellers.

I could write a full post on this.  Or a full theme week.  Or a book.

But it’s actually Question #2 that I wanted to talk about today:

“How many offers are you expecting?”

This is the one question of the three that I couldn’t answer, even if I wanted to.

Whether this is asked one hour after the listing hits MLS on the very first day, or one hour before offers are being presented, the truth is: I have no idea.

There are guesstimates, of course.

There are established rules of thumb that I have refined over the years, to varying degrees of accuracy.

But our sellers want to know “how many offers to expect” so in lieu of simply refusing to put forth a prediction, I have been forced to rely on these rules of thumb.

What measures can we use to predict how many offers will be submitted on a given property?

For one, how many showings take place on a property?  A showing is a good expression of interest, and while not every buyer who sees a property likes it, loves it, or wants to buy it, some will.  So how many showings do you need to produce an offer?

Secondly, how many buyer agents ask for a copy of the home inspection on a house (or a status certificate for a condo)?  Asking for the home inspection is an even better expression of interest than a showing.  It’s a “follow up” of sorts.  It’s a second-tier expression of interest that comes after the initial expression via the showing.

Lastly, how many agents call and express that their buyer(s) are going to make an offer?  “We’ll probably see you on Monday,” one agent would say.  “My buyers are likely going to make an offer,” says another.  Not all of these agents do come to the table, but again, can you use this as some sort of rule of thumb – taking into consideration a percentage of these agents that do submit an offer, and accounting for the ones that submit who haven’t told you they would?

Let’s make a rule of thumb for each situation and see how it plays out in real life.

10-15% of showings = number of offers

50% of requests for home inspection = number of offers

80% of discussion of buyer-client offering = number of offers

So if we have 100 showings, we would expect 10-15 offers.

If we have 10 agents ask for a copy of the home inspection, we would expect 5 offers.

If we have 10 agents call and say that their clients is going to “be there” on offer night, we would expect 8 offers.

Let me go through the four “offer nights” that we had last week and we’ll see how this plays out.

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Property #1:

Detached
3-Bed, 3-Bath
List: $1,598,000

# Showings: 65

# Requests for home inspection: 20

# Agents suggesting they will have an offer: 8

In the end, we received thirteen offers on this property.

The 10-15% of 65 showings would have seen us obtain somewhere between 6.5 – 9.75 offers, so we exceeded that guesstimate with the 13 offers.

The 50% of 20 requests for home inspection would have seen us obtain 10 offers, so we exceeded that guesstimate with the 13 offers.

The 80% of 8 agents suggesting they will have an offer would have seen us obtain 6.4 offers, so we exceeded that guesstimate with the 13 offers.

All in all, we did much better than the metrics would suggest.

And how else can we break down this data?

# Agents requesting home inspection who offered: 8 of 20

# Agents requesting home inspection who did not offer: 12 of 20

That’s interesting.

Only 40% of the agents who asked for the inspection ended up making an offer.

So how did we end up with 13 offers?

# Agents who offered that did not request home inspection: 5

Why would an agent make an offer if they did not request the inspection?  Well, perhaps they viewed the paper copy of the inspection at the property.  Or perhaps they just didn’t care to read an inspection, I don’t know.

But the bottom line is: you’re always going to get offers from agents who didn’t ask for a copy of the inspection.

Now, how about the agents that expressed they would “see us on offer night,” or something to that effect?

# Agents who said they might have an offer, who did bring an offer: 6 of 8

# Agents who brought an offer but who never expressed they would: 7

Remember, not every agent who submits an offer is one that you would have spoken to.  I’m always amazed when I receive an email at 7:05pm, the subject of which is “FW: Scan From Xerox Workcentre,” with an offer on the property from an agent who never reached out.

It’s a funny business.  And sometimes, these agents actually win.  Rarely, but sometimes it’s a dummy who has a rich client.

You never know…

In the end, we did much better than expected from an offer standpoint but also from a price standpoint as this property sold for $2,081,000.

–

Property #2:

Detached
4-Bed, 3-Bath
List: $1,995,000

# Showings: 24

# Requests for home inspection: 6

# Agents suggesting they will have an offer: 1

In the end, we received one offer on this property.

The 10-15% of 24 showings would have seen us obtain somewhere between 2.4 – 3.6 offers, so we lagged behind that guesstimate with the one offer.

The 50% of 6 requests for home inspection would have seen us obtain 3 offers, so we lagged behind that guesstimate with the one offer.

The 80% of only 1 agent suggesting he will have an offer would have seen us obtain 0.8 offers, so we were pretty much on par with that guesstimate, given the one offer.

This was a tougher listing.

There were external factors at play here and while we “only” had 24 showings, there was only one booked after the first day, so activity picked up significantly as the listing went on.

Now this:

# Agents requesting home inspection who offered: 1 of 6

# Agents requesting home inspection who did not offer: 5 of 6

I think this is a tougher metric to use, especially when you have a unique property.  With Property #1, we had 20 requests for the inspection and 13 offers.  Those numbers jive.  But when you’ve got a tricky listing that isn’t stupid under-priced, agents will ask for the inspection so they can help educate their buyers, but I don’t know that the rule of thumb holds.

Now, how about the agents that expressed they would “see us on offer night,” or something to that effect?

# Agents who said they might have an offer, who did bring an offer: 1 of 1

That speaks volumes about the prospects of the property.

We sold for $2,045,000 which was great, given the one offer, but here’s a case where the number of offers was impossible to predict, just as the market value was.

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Property #3:

Semi-detached
3-Bed, 2-Bath
List: $1,195,000

# Showings: 55

# Requests for home inspection: 15

# Agents suggesting they will have an offer: 4

In the end, we received two offers on this property.

The 10-15% of 55 showings would have seen us obtain somewhere between 5.5 – 8.25 offers, so we lagged behind that guesstimate with the two offers.

The 50% of 15 requests for home inspection would have seen us obtain 7.5 offers, so we lagged behind that guesstimate with the two offers.

The 80% of 4 agents suggesting they would have an offer would have seen us obtain 3.2 offers, so we lagged behind that guesstimate with the two offers.

In this case, we were well behind what the rule of thumb would have suggested.

But there’s a reason for this, and I’m not making excuses: the agents in this area are sharp!

I spoke to a number of agents who said, “I would bring you $1,350,000, but I know that’s not going to do it.”

Huh?  Really?  Where’s that attitude out in other neighbourhoods?

That price wouldn’t have been successful, but it’s far from a “dummy offer.”  Speaking of which, where were those dummy offers?  Where were the out-of-town agents offering the list price with two conditions?

Based on the number of requests for the home inspection, I would have thought there would be more offers:

# Agents requesting home inspection who offered: 2 of 15

# Agents requesting home inspection who did not offer: 13 of 15

But a lot of those “13” who asked for the inspection and did not offer were local agents who knew the market value and who knew their buyers didn’t have the budget.

Now, how about the agents that expressed they would “see us on offer night?”

# Agents who said they might have an offer, who did bring an offer: 2 of 4

Of the two agents who said they would likely have an offer, but didn’t, one was a local agent who knew her buyer didn’t have the budget, and one was a guy I simply never heard back from.

In the end, we didn’t get nearly the offers we expected here, but given the $1,476,000 sale price, we did way better than expected where it matters most: price.

–

Property #4:

Condominium
1-Bed,1-Bath
List: $495,000

# Showings: 46

# Requests for status certificate: 10

# Agents suggesting they will have an offer: 2

In the end, we received five offers on this property.

The 10-15% of 46 showings would have seen us obtain somewhere between 4.6 – 6.9 offers, so we were within that range.

The 50% of 10 requests for the condominium’s status certificate would have seen us obtain 5 offers, so we were bang-on.

The 80% of 2 agents suggesting they would have an offer would have seen us obtain 1.6 offers, so we were well ahead of that metric.

Let me address the last section first, this time.

When it comes to entry-level condos, like this one at $495,000, you are often dealing with a lower caliber of agent.  So communication is poor and there’s really no expectation that an agent who has an interested buyer is actually going to, you know, communicate with you!

While only two agents called me and said, “I’m probably going to have an offer for you on Tuesday night,” I knew there would be others.  In fact, the agent with the highest bid is one that I never spoke to.

Here’s an interesting take:

# Agents requesting status certificate who offered: 2 of 10

# Agents requesting status certificate who did not offer: 8 of 10

Only two of the agents who asked for a copy of the status certificate came to the table.

And of the five offers, three were from agents who never requested the status.  Two of those offers were conditional on a lawyer’s review of the status certificate.

The five offers were about what we expected, but the property sold for a whopping $645,000 in the end, which was way more than we expected.

–

So is there anything to learn here?

Or was this a completely wasted exercise?

At times, it feels like you know exactly what to expect.

And in other cases, it feels completely unpredictable.

I’d throw another wrench into the mix here too:

In the case of Property #2, the two offers resulted in a sale price of $280,000 over list, or 123.4% of list.  So now, can we conclude that there’s no correlation between the number of offers and the amount that a property sells over the list price?

Buyers everywhere just tensed up a little bit.

Once upon a time, we had a metric for the correlation between number of offers and the eventual sale price.

Listed at $999,900, there are six offers, well, that means $1,225,000.  Right?

But what if there are only two offers?  Doesn’t that mean $1,095,000?  Hello?

Coming into this blog post, I thought there would be more clarity on the ability to predict the number of offers as well as the potential sale price, but if you’ve just read this, you’re probably coming to the opposite conclusion.

All the more reason to have an agent that knows what he or she is doing?

I think the buyer pool will be split on that, but I can guarantee those in opposition are having less success out there.

This week: expect the typical “post-Victoria-Day-rush” of new listings.

And it couldn’t come at a better time.  When the May TRREB stats are released in two weeks, I’m willing to bet that New Listings have increased since May, but I would also bet that May of 2023 is in the bottom-three for the history of May as well.

Fingers crossed for that hot new listing that you’ve been waiting for!