Here’s why you’re not winning in multiple offers

Some offers are better than others. Some people think it is all about who makes the highest offer but there are other things to take into consideration.

Here is the hierarchy of offers:

  1. Cash offer.
  2. Conventional loan with large down payment.
  3. Conventional loan with smaller down payment.
  4. FHA/VA loans. (Because the appraiser for these loan types does a minor assessment of the house. If the condition does not meet minimum standards set out for each loan type, the Seller HAS to do the repairs in order for the Buyer to get their loan.)
  5. Any loan with down payment assistance where there are two loans that have to go through two different underwriting guidelines.

Then there is the offer amount:

  1. Offer over list price.
  2. Offer list price.
  3. Offer less than list price.

Then there is the home inspection. Three choices there:

  1. No home inspection at all.
  2. Buyer does home inspection but won’t ask for repairs. Will either accept the house or walk away.
  3. Buyer wants to negotiate repairs with Seller.

Then there is the appriasal:

  1. Buyer will cover any possible gap between sale price and appraised value in cash.
  2. Buyer won’t cover any possible gap between sale price and appraised value in cash.

Then there is the Buyer’s lender:

  1. Buyer will use a local lender that every realtor knows does a good job.
  2. Buyer will use a non-local mortgage company.
  3. Buyer will use a local lender that every realtor knows preapproves any buyer with a pulse.
  4. Buyer will use a bank that begins with the letter C that everybody knows will be difficult to work with and that it is unlikely to close on time.

Then there is the closing date and when the buyer can move in the house:

  1. Buyer’s realtor found out when Sellers want to close and put that date on the offer.
  2. Buyer’s realtor doesn’t know to ask this and that it can really help make their client’s offer more attractive.

Then there are contingencies:

  1. Buyer has no contingencies.
  2. Buyer needs to close their old house first in order to buy the new one.
  3. Buyer needs to sell their old house first in order to buy the new one, meaning it currently may not be on the market and definitely doesn’t have a contract on it.

Then there are closing costs:

  1. Buyer will pay their own closing costs.
  2. Buyer needs Seller to pay some of their closing costs.
  3. Buyer needs Seller to pay all of their closing costs.

What are your numbers? If you are a 1 in all of these, go out and make your offer. You will probably get the house. If you are a low number in any of these, best of luck. If you are the bottom of any or all of these, then you are wasting your time. Sorry, but you are. You are not going to get a house making an offer less than list price with an FHA loan, wanting to negotiate repairs with the Seller and needing to close or sell your old house.

Now that you know all the things a listing realtor is thinking about when they process all the offers, do what you can to make your offer the best it can possibly be. If you are doing a conventional loan and think you are going up against other cash offers, maybe waive the home inspection and offer to let the seller stay in the house briefly after the closing? If you have to close on your old house to buy, make your offer the highest one they get (realize too that moving twice costs money and it might be cheaper to pay the most for a house verses paying to move twice, live somewhere temporarily and then look for another house which will have gone up in value while you wait.)

When I moved in 2012, I was up against 4 other offers. Two of them were cash. That was unheard of back then but common today. I knew I couldn’t compete with cash so I went a little over the list price, waived the home inspection and offered to let the Sellers rent back from me until they found their new house. This was appealing to them since they had not found their new house yet.

I’m really proud of this…….

“If I have to send them postcards and basketball schedules to make them remember me, then I don’t deserve to be remembered.”

That’s what I told my broker back in 2005 as a new agent when I was told what I needed to do to keep people coming back and referring people to me. Back then about the only way to keep up with your clients was to send postcards reminding them of time changes, packets of seed in the spring, calendars, basketball schedules, etc. There was also a schedule for calling people and taking them out to lunch periodically too.

I think I sent calendars the first year but did nothing else like that ever.

I wanted to be a realtor. To me, realtors did real estate work. Licking stamps and always looking for the next house to sell didn’t appeal to me. I wanted to show houses, answer questions, do research on values, give my opinions on houses and neighborhoods, negotiate deals and work them to the closing.

Many agents in my office thought I was crazy. And not just because I wore shorts all the time. They didn’t think I would make it since I didn’t do all the status quo things they did.

My plan was to just do a really good job for my people. I thought if you left the closing and they thought you did a good job, there was no need to keep reminding them you are still a realtor.

It worked obviously since here I am today, but I’ve got one special story to share.

15 years ago I sold a house for an elderly lady. I met her daughter too. I really liked them both. I closed several weeks ago on the daughter’s new house and am closing on her old house next week. I have not seen or talked to her since that closing back in 2006.

She went to a lot of trouble to track me down. I have since gotten my brokers license and stated my own business. She just remembered my name and the real estate company I was with back then.

I had forgotten how I met them so I recently asked. She told me her and her mother came to an open house I had in 2006. They didn’t like my listing, so I told them about all the other ones in the condo complex. I told them the good and bad of the whole complex as well as the good and bad of other ones that were for sale. She said she liked how helpful I was so they decided to use me to sell her mother’s house even though she had a good friend who was also a realtor.

I don’t feel old enough for that to have been 15 years ago, but it was. What an honor to be remembered by somebody after all that time.

What do these 3 sellers have in common?

I’ve got a busy week coming up. I have 3 people who the only thing they have in common are that they have houses to sell and have picked me to be their realtor.

Two of the clients have used me before. One of them is a family member.

The house in the first block of Kenwick is owned by a person whose mother used me to sell a house in Palomar. I don’t even remember how they found me. They were great to work with. I had lost contact with the daughter. I had often thought of her since she lived in Kenwick, and I did too when I was much younger. One day out of the blue, she calls me and says she is buying and selling. She didn’t think I would remember her since it had been close to 15 years, but I couldn’t forget her. She had to do a little digging to track me down since I had gone out on my own several years ago. It has been great catching up with her and working with her on her new home. She is fun, laid back and very wise.

The house in Beaumont is owned by a very special family to me. They used me to buy the house many years ago. I thoroughly enjoyed working with them and was very excited when they told me it was time to move again. We found their perfect home within walking distance of their old home. We had quite a dramatic time buying the new place since it was in multiple offers. This family is just so nice and pleasant to work with. It has been one of the highlights of my summer to work with them again.

The house in Landowne Merrick is owned by my cousin’s family. It has served them well but it’s time to move up to something that better fits their stage in life now. I don’t get to see my cousin all that much so it has been a lot of fun to go look at houses with her and her husband. Sometimes my aunt and uncle show up to for the showings so it is like a family reunion but at some stranger’s house.

I’ve got two more listings in the pipeline that should be ready before long. It’s been a great year and an especially great summer. Selling these three houses for these three fantastic sellers will be a nice way to wrap up my summer.

Are prices going to drop?

I’m reading a lot of headlines and seeing YouTube videos about the market crashing.

Is it going to happen? Short answer is NO.

Is the market slowing down a little right now? YES. It always does this time of year. People go on vacation and those with kids like to be in their new home before school starts. I always like this time of year because I can catch my breath and enjoy a break before it picks back up a little for the rest of the year. When I go to a track and I get used to doing 120 MPH in a straight, hopping on the interstate on the way home and doing 80 feels slow. Right now we are all so used to a crazy fast market, that even a strong but not super strong seller’s market feels like a major slow down.

Are we seeing more houses come on the market right now? YES. I think this is because all the sellers who would have sold during COVID now feel it is okay to put their house on the market. We started seeing more listings hit the market after the vaccinations rolled out. This makes me think that the sudden increase in inventory hit all at once. We will see if it keeps up. Really though, I sort of hope it does. I would love to see a balanced market where there aren’t 5 offers the first day on the market for a loser house and 15 offers the first day for an HGTV worthy house. Simple economics tells us that as long as there are more buyers than sellers, that it will remain a seller’s market. As long as it is at least a balanced market, meaning supply is equal to demand, prices will remain the same.

The worst thing you can do in multiple offers

This one always drives me crazy. There are a lot of bad things to do during multiple offers when you are the buyer’s realtor, but trying to rush the listing realtor is the worst.

What I mean here is where a realtor sends you over an offer and puts something like a 2 hour deadline for acceptance. I get it. Their goal in this is to make you hurry up and accept their offer before another offer comes in but I have NEVER seen it work in their interest. It usually backfires.

There are three reasons why:

  1. Do you know what happens once that short time frame for acceptance passes? The offer has technically expired. I don’t know about other realtors but the last thing I want is for the listing realtor to think the offer I sent is dead because the time has past. In this market, I usually do the opposite. I know listing realtors are wanting to get several offers and it is common for a seller to not even review all the offers until 2-3 days after the listing went live. I like to give them plenty of time. Why? Because I know I am not going to get them hurry up. They are going to do whatever they want and I want my client’s offer to be valid whenever it is presented. I also want to come across like we will be easy to work with.
  2. It makes the seller not like you. This is an even bigger one. Nobody likes pushy people. We don’t like it when somebody keeps pushing their grocery cart too close to us in the check out line. We don’t like tailgaters when driving. And in the hottest seller’s market in all of history, we sure don’t like it when buyers try to exert some pressure on us.
  3. It makes you question their commitment. I recently had this happen to me. I got a really good offer on a listing the first day on the market. I told the realtor, who was also the buyer, that we were planning on reviewing offers on the following Monday. She pointed out that she had given us a two hour window. I suggested she extend that until Monday. She fought back and said she didn’t know if she was still interested in the house if she couldn’t buy it that day. That tells me two things about her. She was either bluffing or was serious. Both are bad signs to me. If she was bluffing, it tells me she is going to try to manipulate us through the entire sale process. If she was not bluffing, she probably wasn’t totally in love with the house and there was a greater risk of her backing out of the sale before it closed. I told this to the sellers and they agreed that the only way we were gonna sell the house to her was if her offer was the only one we got. Fortunately we got 3 other offers and I was happy to tell her she didn’t get the house…….and I did it before her precious deadline.