I know I have written about this before but it keeps happening. Sometimes when there are multiple offers on a home the highest offers or all of the offers are identical or close to exactly the same.
If you are a home seller do not be surprised if you get multiple offers and if all are lower than the asking price. It is even possible to get two identical offers that are less than the asking price.
Sometimes multiple offers are over the asking price. That is what home sellers hope for but is especially challenging for buyers. Usually buyers will not be told what is in the other offers. It kind of feels like gambling.
Three offers on a home are really all you need. That way there may be a tie breaker.
Sometimes sellers will not negotiate. If they don’t like the offers they will try to get more offers. I am not sure how that works for them. Negotiating with the buyers makes more sense and is probably faster too.
Occasionally buyers win in multiple offer situations by adding an odd an random number of dollars onto the end of their offer. For instance instead of offering 200K an offer could be for 200,890, or 210,000.78. 199K looks like a lot less than the other two numbers.
There is more to a good offer than money. A higher downpayment means that an offer is more likely to close. More earnest money means that the buyer is serious. A quickly closing date may be desirable if the sellers have already moved on. An offer where the buyers are paying their own closing costs is usually better too.
Some buyers are skipping the inspection contingency. Please do not skip the inspection. The inspection protects buyers and sellers. I strongly encourage buyers to have a complete home inspection.
Our MLS shows the measurements for homes that are on the market. Including room sizes, which floor the room is on, the foundation size, the total finished above and below ground square footages.
There are some things home buyers should know:
1. Not everything you read in the MLS is 100% accurate, which is why if you read the fine print it will say the information is “deemed reliable but not guaranteed”. We strive for accuracy and there are checks and balances, but mistakes are made. Total square footages and room sizes are not always accurate.
Generally agents do not deliberately misrepresent room sizes or square footages but sometimes they make mistakes and sometimes they just use the last set of measurements that were in the MLS without verifying them.
2. Finished Square footage is not equal. What I mean by that is that below ground square footage is not as valuable as above ground square footage is so when looking at the totals check to see how much is above ground and how much is below.
3. Property tax records do not always show an accurate square footage and the square footage is used in the record to calculate the value of the home. Sometimes buyers like to use tax records as a source of information about property values. If the square footages are wrong the value could also be wrong because size matters.
There are rules about what can be included in finished square footage. Certainly closets, hallways and bathrooms are included even though we don’t see measurements for them separately in the MLS. If there is a finished room that is surrounded by unfinished space we can not include it in the finished square footage. Sometimes there will be one room finished in the basement but the space outside the room is unfinished.
It isn’t always easy to get accurate measurements. Some rooms have irregular shapes and we are only allowed to put two measurements in the MLS for each room.
It should be noted that the source of the information about homes for sale is the Northstar MLS which feeds data to sites like Zillow and the web sites of real estate companies. MLS online is not the MLS but a real estate company. Confusing I know but it is what it is.
**real estate is local if any of these rules apply outside of Minnesota it is purely by chance. 🙂
I have met some interesting neighbors over the years and most of my home buyer clients really want to know who the neighbors are. Neighbors tend to come and go. Some of the best neighbors take jobs in other states and move away.
Other neighbors will stay put and some neighbors will run out to greet potential buyers and tell the all about the house and the neighborhood. Sometimes what they say helps sell the house and other times they chase potential buyers away.
People seem to want to live next door to people who are just like them and sometimes it works out that way.
I’ll never forget the time I listed a house and the neighbor across the street was selling his house. That was back during the buyers market. The neighbor would watch out the window and as people were done looking at my listing he would come outside and try to get them to look at his house.
Occasionally while buyers are looking at a house there are nearby neighbors behaving badly. Buyers usually quickly loose interest in the house.
How your neighbors house looks will affect your ability to sell your house. There isn’t much you can do about your neighbors except hope and pray that they behave themselves while your home is on the market.
Yes you can survive a multiple offer situation and be the winner. Be realistic about the value of the home you are making an offer on and understand that sometimes in multiple offer situations the highest offers are below the asking price or maybe at or slightly over. Also know that if it doesn’t work out a better house will come along.
Occasionally I work with buyers who are concerned about the amount of work I have to do to write an offer. That is my job and I am always happy to write an offer even if it seems to be a long shot, so bring it on.
Serious buyers will need to put their best foot forward and make their first offer their best offer in a multiple offer situation because they may not get the chance to negotiate. Often buyers imagine scenarios where they offer X amount and sellers counter at X amount and they end up getting the house for the amount they had in mind. In todays market the seller is calling the shots.
The best offer isn’t always the offer of the most money. Financing is important too. Buyers who are putting more than 5% down may have an advantage. More cash in the mix means that there is a greater chance that the loan will close.
Closing dates matter. Buyer who are inflexible will have less negotiating power. The best strategy is to ask your agent to find out what the sellers have in mind for a closing date. Sellers who need to move into a home that they have an offer on may have to pass on an offer that is 110% of the asking price with a closing in 90 days or maybe the offer is perfect for them.
Flexibility on possession date and time can be important. I have seen situations where sellers need to move out of one home and into another on the same day that they are closing on both the sale of their home and the purchase of another. Not an ideal situation but it happens. Buyers who can allow the seller a little more time to move out can have an advantage in a multiple offer situation that doesn’t cost them a dime.
The amount of the offer is important. I have never seen a lowball offer win in a multiple offer situation. If the home just came on the market today the seller may not be ready to consider a less than full price offer. Buyers sometimes offer less because that is how much they can afford. That strategy mostly isn’t going to work.
When the perfect home comes on the market it may be sold by the weekend, be ready to make an offer now. Have a pre-approval letter ready. See the home as soon as you can and make an offer or let your agent know you want to make an offer as soon as possible. Sometimes sellers will wait a few hours or even a day for an offer even though they have others if they know the offer is coming and the reason for the delay.
Assuming that the sellers have a lot of money that they can contribute to closing costs is a mistake. Sellers who owe a lot of money on a home may not have the resources to pay the buyers closing costs. An offer that does not require a seller contribution may be more attractive to a seller even though it is for less money.
Do not and I repeat DO NOT skip the inspection – do make your offer inspection contingent. Some buyers are making offers that are not inspection contingent in hopes that the seller will consider it a better offer. Sellers with half a brain should know that the inspection protects them too. Please have a complete home inspection before purchasing a home.
Work with an agent who is prepared and who can quickly write an offer and one with a lot of experience in multiple offer situations.
My clients will tell you I like to tell stories. They are mostly true stories where only the names of the actual parties involved have been changed.
I can spot if from a mile away when “the Mr.” has finished the basement himself or has done some major remodeling. Sure there are a lot of folks who are very talented and they do wonderful work but they are not always aware of building codes and do not get permits for work that requires permits and licensed contractors.
I’ll just say that I have seen some wacky, dangerous and weird remodels and repairs that have had to be undone to make the home salable and safe again.
Sometimes un-permitted work has to be taken apart and inspected or redone when permits are needed for another remodel or when the lender finds out that work was done without permits and the home loan can not be approved until the work is signed off on . . . which usually means city inspectors have to inspect it and say that it is up to code.
There is work that can be done without a building permit, like painting and putting in new flooring, or new exterior doors. A new backsplash or even a counter top can be put in the kitchen too. Electrical work, plumbing, and construction all require permits. Decks require permits and so do fences. I could go on and on.
When I see a house that is for sale that appears to have had a lot of work done on it I look it up on the property look up web site and check for permits. Generally a home sale can not close if there are open permits. An open permit is one where the inspector has not signed off on the work.
I don’t think there is anything magical about permits. I have seen work that has been approved that should not have been. I think it is important for the buyer to know what he/she/they are buying. As one handyman recently told me, most anything on the interior or exterior of a house can be fixed, replaced or rebuilt.
Minnesota home sellers have options when it comes to disclosing multiple offers. They can disclose that there are multiple offers and even let all possibly interested parties know that there are offers. That way maybe the sellers can get more offers and let the buyers work to outbid each other.
Sellers can choose to not to disclose that they have an offer, or offers. This method can be an effective way to get buyers to make their best offer.
Another option is to only disclose that there is an offer if someone asks, and there is a fourth option. Since sellers are asked to make a choice when they sign the listing contract the fourth option is to consult your agent and make a decision when the time comes.
Sellers rarely choose to not disclose if there are other offers but it can be a great choice especially for those sellers who are not afraid to negotiate.
Buyers need to understand that they do not have the right to know if there is an offer on a property but they should always ask. Once an offer is accepted the status changes in the MLS. Buyers should find out before the see the home that the seller has accepted an offer. usually the offer is still contingent but once the inspection contingency or other contingency is removed the status is changed to “pending”. Sellers can collect offers up to the closing but can only accept one offer at a time.
I’ll add that some agents put a comment in agent remarks on the MLS stating that “highest and best offers must be in by ____ at______. Sometimes that is a bluff and there are no offers and the home stays on the market long after the deadline. The verbiage is used to create a false sense of urgency.