“The customer is always right.” Right?
Not always, especially when real estate experience trumps wishful thinking…
What is the point in offering less than the asking price in a multiple offer situation?
There is none. But people still do it…
Multiple offer scenarios are common place once again, and the uninformed, naive buyers are causing a disturbance in the natural progression of the market.
A naive, uninformed buyer is the person who offers $245,000 for a condo listed at $249,000 when there are four offers.
This buyer is naive because he is dreaming, and uninformed because his Realtor is too afraid to tell him the truth – for fear of losing the client.
Not me, baby!
I don’t believe in helping a seller get more money for a property by submitting an offer that has ZERO chance of being accepted!
Because that is exactly what you’re doing when you submit what equates to a dummy offer – you’re artificially inflating the price by taking three offers and making it four.
I’m not saying that all properties sell for above asking.
And I’m not saying that all properties get multiple offers.
But when there ARE multiples, the property WILL sell for the asking price or more.
There are three “hints” to a property getting multiple offers:
1) There is a set offer date, ie. the MLS listing reads, “Offers graciously accepted on Monday, July 6th @ 7PM, please register by 5PM.”
2) The price seems to good to be true, ie. comparables have sold for $300,000 and this property is priced at $289K, with a hold-back on offers.
3) There is a steady lineup of agents showing the property every night from 6-9PM.
Consider the last point.
I showed a property at 66 Portland Street last week where the agents basically played tag with the keys.
We arrived to find the lockbox empty, and we waited for an agent to come out of the building with the keys. During this time, another agent and his clients showed up, so I took my clients along with the other agent and his clients to see the unit all at the same time.
While we were inside the unit, another agent and his clients knocked on the door (rather than patiently waiting outside the building…), making it three groups inside.
We finished up, and upon exiting the unit, I handed the keys to a fourth agent who was getting off the elevator.
When I came downstairs and left the building, a fifth agent asked me “Do you have the keys?”
That made FIVE groups of buyers coming through the unit in no more than twenty minutes.
Do ya think it’s gettin’ multiples???
So if you personally witness the madness that is going on with hoards of people coming in and out of a house or condo like this, then WHY oh WHY would you offer less than the asking price?
I’m not trying to make an easy sale here – I’m just being realistic.
But some buyers, and even some agents don’t heed my simplistic advice…
Case in point, an agent in my office told me a story last week about a similar situation.
His client was a first-time-buyer who was getting a lot of advice from her mother.
The property was listed at $279,900, and there were three offers including that of my colleague’s. I told him that he had to be around $290K to be in the game, and maybe something like a $293,600 offer price would get it done.
But his client felt that the property was only “worth” $270,000. Well actually, I think her mother came up with the $270,000 number and she just listened to her mother while ignoring her agent’s advice.
The property sold for $292,000 even.
So was there any point in offering $270,000? No, of course not.
But what bothers me about this situation is that had my colleague’s client not thrown her worthless $270,000 offer into the mix, there would have been only two offers instead of three.
More likely than not, this would have led the $292,000 bidder to say, “Well, there’s only one offer competing against me, so I think I’m going to offer $288,500.”
That “dummy” offer of $270,000 helped to artificially increase the eventual selling price!
In a multiple offer situation, you don’t know what the other buyers are offering. It’s like hitting a blind golf shot over the trees and onto the green – you don’t know what it passed through to get there; you only know the end result.
What also bothers me about this situation, is that my colleague allowed his client to go through with the worthless offer! He said, “Well I just want to walk her through the process so she gets her feet wet and she’s ready for next time.”
In doing so, he helped to raise the sale price of the property, all so he could “help his buyer go through the process.”
Realtors are just as much to blame for artificially inflated prices as naive buyers.
I don’t want to sound ungrateful for my business, or like a pushy salesperson, but if I had a buyer who wanted to offer $270,000 on a $279,000 property when there are 3-4 offers, I wouldn’t do it.
And if the buyer threatened to take his business elsewhere, I would let him.
After all, if the buyer doesn’t trust my judgment (ie. you have zero chance at this property with that offer, so let’s hold off and find something more affordable), then why is that buyer working with me?
There is no luck in real estate.
There are only deals in certain types of markets, and we aren’t in the deal-making market at the moment.
When a buyer wants to throw a worthless offer into the fray and says, “Who knows, maybe we’ll get lucky,” it bothers me to no end.
Sorry to say, but it just doesn’t work that way.
The market is far too efficient to let that happen, and even if by some act of God, all four offers were identical lowball $270,000’s, the seller and the listing agent probably wouldn’t take any of the offers, because nobody can force you to sell!
A tip for anybody entering a multiple offer situation: be realistic.
You can hope and dream all you want.
But reality prevails in the end.
And you’re just setting yourself up for disappointment…