A scenario we are seeing as of late, buyers hesitate to write offers in a timely manner, consequences? Well, yes, in a spring Sacramento market, homes sell faster than in the winter. A listing located in Midtown Sacramento we already put in escrow. Of course, now another couple who had seen it 4 times didn’t write soon enough. They submitted an offer a little too late, and are trying to get into back up offer position.
Another listing in Natomas, the buyer wrote three consecutive offers; however, the first two were not viable. Of course, another offer comes in! Now, they are competing in a multiple-offer situation. If the first buyer had written a substantial offer instead of writing lower offers, they would have been in contract long before today.
Christmas-time is a perfect example of how a buyer can miss the train in Sacramento real estate. The buyer’s agent was trying to write an offer while juggling a bunch of small children, picking up family members at the airport and unwrapping presents on Christmas Day. We agents work all the time, but sometimes, maybe we should not. Or maybe we should hand the buyers over to an agent who has time.
This particular agent was in such a rush, she did not stop to consider that she could miss the train in Sacramento real estate. When she called, I let her know we had sent a counter offer to other buyers. Also explained I fully expected that buyer to accept the counter offer. It was mostly clarifications and we had already agreed upon the terms. However, if she sent a better offer, the seller is always free to pull back the counter offer.
The other drawback to reviewing offers on a future date is the fact sellers will eliminate buyers from trying to buy their home. From the seller’s point of view, if a buyer is interested, it doesn’t matter. But that’s because sellers often try to judge the situation from a seller’s point of view instead of a buyer’s point of view. They say to themselves, “well, if I were a buyer, I wouldn’t care.” But they don’t know that to be fact. They simply wish it to be fact.
Buyers do not like multiple offers. No buyer hopes a million other buyers will bid on the same house. In fact, some buyers openly state if there will be multiple offers, they want no part of those negotiations. The stress is too much. Further, they feel pressured into making decisions they don’t want to make, like paying more for the house. Some feel overpaying is a fool’s job. Even though those that overpay often end up with the house and those who do not, cannot buy a house like that.
On top of which, overpaying is subjective and time sensitive. If other buyers are willing to pay more, it defines market value. If it’s market value, then a buyer is not overpaying. If the value is higher than appraised value, in a year or so, it won’t be. And bottom line, somebody will buy the house, why can’t it be a buyer who doesn’t particularly enjoy multiple offers?
Reviewing offers on a future date makes sense if it’s pretty much iron clad that demand will be high. If the property is gorgeous enough to warrant it. On the other side, it also makes sense when selling fixer homes. Two extremes. Polar opposites. It’s even easier to attract top dollar when pricing a home at that sweet spot. Then a seller can sit back and collect offers without feeling pressured. It leaves no doubt lingering in the seller’s mind that she could have left any money on the table. Investors don’t whine much about reviewing offers on a future date.
Helping the seller to pick the best offer is an important part of a listing agent’s job. Sometimes we have only one offer so it’s a no-brainer. Although, I will say we received a full-price offer on another listing recently when the seller snapped, “I’m not taking THAT.” What? Why not? Because the seller expected buyers to fight over her home and to offer more than list price. She just didn’t share those thoughts with me until we received an offer. It was our only offer, too.
The only thing we could do was take it off the market and put it back at a higher price. I didn’t want buyers to see we had raised the price, or they might not want to buy it. They might misjudge the situation and think the seller is crazy. I wanted a nice clean presentation at the higher price.
Now, obviously, when we receive multiple offers much of the time there might be that one particular offer that stands out from the rest of average offers. Sometimes, I might suggest the seller counter only one offer. Other times I might suggest we counter two or three, even offers we don’t want. We make the counters outrageous that if they did accept, we might reconsider.
But the problem that happens more often than not is we will receive two offers that are very similar to each other. They might even be for the exact price. Then what do you do? How do you pick the best offer? One method is to consider the qualifications of the borrower. For example, how much is the earnest money? Who is the mortgage lender? We usually lean toward local lenders, btw. A loan officer with a recognized track record and local appraisal management companies.
Yeah, so what happens if all of those things are equal? Maybe the net is identical to the seller. Both buyers very strong, qualified, committed. What can make the difference then? In my experience, it boils down to the buyer’s agent. Who is the buyer’s agent? Is that agent difficult or cooperative? After all, we need to count on the buyer’s agent to educate the buyer throughout the process and manage her or his side of the transaction.
We are often in daily contact with the agent. Is the agent responsive? Quick to communicate? Professional? The agent can make or break the buyer’s chances of winning a multiple offer situation. One of the last determining factors when considering how to pick the best offer is deciding on which agent we want to be in escrow with. While Sacramento listing agents don’t pick the best offer themselves, we do help the seller to choose.
So buyer’s agents should think about whether it is really wise to be argumentative off the bat. How being pushy and aggressive is not the way to best represent their buyer. I’ve watched more than one deserving buyer lose the house because of their agent’s lousy attitude.
When I first introduced this fixer home in Rancho Cordova to the market, I did not think we would receive a bunch of identical purchase offers. Usually the way these things go, agents advise their buyers to submit sales prices all over the place. Plus, there are usually always those kind of buyers who won’t pay list price for any home. They don’t care if it’s underpriced, they simply refuse to pay list price and expect a break on the price. But we didn’t get any of those kinds of buyers. That’s not to say we didn’t get a knucklehead here and there.
I should point out this was a home we had priced at $225,000. Not because we deliberately wanted to cause a ruckus but because that’s the amount at which the last fixers in the area sold. Identical purchase offers? Wasn’t even a goal. We just hoped for the best offer from the most motivated buyer who could quickly close. One agent wrote to ask why the confidential remarks stated “submit your best offer over list price.” Um, because we wanted to pick the best offer that exceeded our sales price and we were not considering any offers less than that?
Another buyer submitted an offer at $237,500. They were doing a 1031 exchange and were running out of time during their 45-day time period to select a property. The seller said, hell yes, that’s a good offer. We had motivation. Except we also had a pile of $240K offers on the table. So we countered the 1031 exchange buyers at $240K. They had to “think about it”, initially, which meant they probably had written other offers which is definitely not kosher nor legal. They did not seem like ethical buyers. We withdrew the counter offer.
There were also a few of those brown noses insisting on working directly with the listing agent. Hoping we would sooo love to double-end the transaction that we’d double-cross our sellers, break fiduciary. They think they can throw money at agents, and obviously sometimes they can, or they wouldn’t do it. Doesn’t work in my situation. I won’t work directly with them, so their evil little plans backfire. They can work with my team members or they can get their own agent, I don’t care.
Let’s not even talk about the agent who damaged the home by kicking in the garage siding, twice. With his client standing right there. Then allegedly he swore at the witnesses who shot photos of his car. Good thing he didn’t write an offer.
So many identical purchase offers. And then one identical offer was suddenly different than everybody else. It contained no contingencies, they were actively removed, a huge earnest money and the buyer agreed to deposit all of the cash into escrow right away. Same price but much better terms. We closed escrow 7 days later at $15,000 over list price with 11 offers.