Multiple Offers? Sellers-How to Avoid leaving big $$$ on the table!

Multiple offers? Sellers-How to avoid leaving thousands of $$$ on the table.

  Due to our severely constrained inventory here in the “Wine Country” of Sonoma County, California, we are seeing multiple offers in the “hot” price points below our new median of $550,000. Not 10, 15 or 20  when the market was super wacky but more tempered, 3, 5, 7 offers BUT with gusts in the low 20’s for super fixer properties. Why? Let’s analyze the current real estate marketplace in Sonoma County. The inventory of homes is not gaining traction. Our biggest month so far this year was March for new listings and it has been retreating since then. March is usually our "Launch" month for new listings. The real estate rocket veered off course this year! Our MLS (Multiple Listing Service) has 843 “Active” or “Showable” listings on the market for a countywide population of over 500,000. This is for all price points and for every city in our fair county: Petaluma, Rohnert Park, Cotati, Santa Rosa, Sonoma, Healdsburg, Sebastopol, Windsor, Cloverdale and the entire Russian River resort area and the coast! Whew! NOT MUCH. This is the lowest it has been in over 3 years.  A scarcity of homes, historic low interest rates and strong demand is fertile ground for “multiple offers”.

   Savvy Realtors know this. They study existing pricing of the “competition” (other active listings) setting an attractive price BELOW overpriced homes languishing on the market creating BIG excitement and MANY OFFERS.

    In the “hot” market we experienced in 2012, 2013, fed by the REO listings and Short-Sales, properties were being snatched up with big multiple offer prices sometimes $25,000, $50,000, $75,000 over asking.  A seller taking the “first” offer left BIG bucks on the table. The seller would accept the first offer only to find higher offers in the wings. Sellers sought comfort in the knowledge, “I got my price.” But at what cost? The last two years we have seen less and less listings coming onto the market. In the craziness of the pre-recession real estate market we had “Active” listings in the 2,000+ range.

          I’m not saying we are BACK to those hyper competitive days. However the sheer scarcity of houses is driving the market. When a well-priced, impeccably presented home hits the market it CAN and WILL generate multiple offers. Pricing is king in THIS market. The appreciation rocket has seen our county -wide median priced home increase 58% in the last three years to a new “post-recession” high of $550,000. Many listings, aggresively priced,  are languishing on the market.  A strategy of pricing BELOW market comps and letting the market chase YOUR price is very smart.

  Realtors have distinct schools of thought when dealing with multiple offers. Scenario #1 is to review all offers “as they come.”  First come—first served. No date set for offers. This can get somewhat hectic and confusing. You are negotiating with ONE offer but hear of others coming in.  What to do?  Stall? This method creates a footrace to get an offer presented and buyers have little or no time to really think the offer over.  The buyers feel pressured and may back out or rescind their offer. You may take a great offer only to find that another buyer is offering BIG bucks OVER offer number one. How to avoid this?

Many Realtors choose scenario #2; set a date in the near future from the list date (5-10 days out) in which to review all offers with the seller and seller’s agent. No foot race, no hectic stampede. The listing agent will set a date in the future and ADHERE to that schedule. This is VERY important as Realtors will be scheduling their Buyers to view the property and discuss offer price with the review date in mind.  Accepting an offer PRIOR to this date is NOT fair to the agents and creates confusion and animosity. However, THIS is the Seller’s choice.  

           Once you’ve determined to be that hot, multiple-offer-generating listing you may wish to take this strategy.  Your Realtor will place the property on the market stating in the confidential remarks something like, “All offers due 5 days from list date by 5:00pm. Offers to be reviewed by Seller at this time.”  The listing agent may ask that ALL offers be emailed or faxed to the listing agent. The listing agent may present offers without the Buyer’s agent present. This is the SELLER’s call—Not the listing agent. This needs to be communicated to the other Realtors. Here’s what might happen;

1. Some buyers will state, “I don’t want to be in a bidding war.” These folks will NOT present an offer.

2. A “Buyer’s Agent” may insist on presenting his/her offer TO the Seller direct. Once again—this is for the Seller to decide. (This could happen in either one of our scenarios).

3. Buyer’s may “overbid” way over asking in order to “tie-up” the property. They sometimes cancel the deal after a cursory look-see or use inspection reports to knock down the price. These buyers have most likely been “burned” in the past by being overbid.

4. Buyer’s may offer way too much and get “Buyer’s remorse” and cancel after acceptance or worse—are presenting multiple offers on multiple properties without disclosing to the Seller. I personally like to bargain in “good-faith” one property at a time.  

5. You receive multiple and strong offers.

    

   Here are your options: If you have strong, multiple attractive offers you can elect to:

• Accept the strongest off of the lot.

• Send out ONE counter-offer to the best offer clarifying details about the offer.

• Send out a “Highest and Best” Multiple counter-offer to those you feel have the strongest interest. . If one or more of the buyers agree to your counter offer, the offer you then choose will need your “counter-signature” to be valid.  This way you won’t be risking selling the same property to three buyers. You set a date in the near future WHEN they are due back. Again, avoiding the foot-race, eliminating the pressure packed decision making as in Scenario #1.  

   

  Scenario #2 seems to generate the highest price for your property. Buyers can think about their offer for days before it is presented. They can analyze the property in advance of presentation. They may be able to “hone” their offer and eliminate some contingencies over this time. This equates to a “cleaner” offer for you and usually for MORE money than list.

   

  In closing, your Realtor can best advise you on which scenario will work for YOUR house. As we stated, this is NOT for all properties but more and more we are seeing multiple offers in the “hot” price points near our median Sonoma County home price.  But any property may be a candidate for a multiple offer scenario and in any price point.  This being said, I’ve seen multiple offers in the $1,000,000 price point—all the components to be that “hot”, “Multiple-Offer” property should be present; great price, stunning staging, impeccably brought to market and exposed to the highest audience.