How much should you offer?

It is hard to know how much to offer when buying houses in St. Paul. Homes with multiple offers will sell for more than the asking price. There is a learning curve with each price range and neighborhood. A little house hunting brings most buyers up to speed on which homes are going to sell quickly at their current price.

When I looked at what percentage of the original list price home sellers got I found that for the last two years the median is 100%.

The data used to make the graph is from the NorthstarMLS which is deemed reliable but not guaranteed.

Graph of sale price
sale price as a percentage of the last asking price

Do you know what your real estate agent is doing?

lowertown buildings
Downtown St. Paul

I have been writing about the seller’s market and lack of homes for sale for a few years now. It has changed the dynamics from the days when we used to “woo” buyers.

Yesterday I sent an email with a question a buyer has about a home that is being listed by a big real estate team. I got an immediate reply from an autoresponder thanking me for my offer.

I am still trying to reach the team. I think they will get offers and they don’t care about the question.

Some listings have information about which days they will look at offers and present them to sellers. I contact my home seller clients as soon as I receive an offer.  I work around my clients schedule not my own.

The real estate buying process has changed a lot. There are rules, deadlines, and ultimatums being set by sellers agents. If these agents can spend less time and money on each listing they can make more money.

Real estate agents represent their clients. Often the buyer is ticked off and even distrustful of the seller and frustrated with the process before the seller even gets the offer.

I know several successful real estate agents who treat everyone fairly and with kindness. No one has to hire a jerk to get their real estate sold.

There isn’t any advantage to home sellers in having an agent who is a jerk. I can not see any business reason for treating other agents or their clients any differently than we treat our own clients.

Showings were down in March

A couple of my data sources show that showings were lower in March of 2019 than they were in March of 2018. According to ShowingTime, they were down 9.2% in the midwest.

ShowingTime is the online appointment solution we use locally to schedule showings which are appointments to tour homes for sale.

In the Twin Cities homes on the market got an average of 6.8 showings in March as compared with 7.1 in March of 2018. One possible explanation could be that homes are selling so fast in the metro area that they are not on the market long enough to have many showings.

If I look at average days on the market in March of 2018 Vs. March of 2019, the numbers are 26 in 2018 Vs. 23 in 2019. Which means my theory has some merit.

Often with numbers, the cause and effect are not well established. A random metric is chosen and we are supposed to draw a conclusion.

There are more buyers than there are sellers. I think this trend will continue for the next several years. The trend impacts all of our metrics.

If you are interested in selling your house, please contact us for a free consultation. 

When “highest and best” backfires

It is true that homes in St. Paul sell quickly. There are certain types of houses and price ranges and neighborhoods that are particularly attractive to first time home buyers.

A couple of weeks ago I showed 10 houses to some buyers on the weekend and by the following Wednesday, all of them had offers on them except for that one overpriced house.

As I was making appointments to see the houses with the buyers they would get offers before we could see them. I was able to find some substitutes that had just come on the market.

Sometimes I would get an email before a showing advising me that the house had offers on it and that the highest and best offer is due in a day or in a few hours.

Generally, buyers do not want to see houses that already have offers on them and most like a little time to think about making an offer after they see a house.

Most buyers do not go out of there way to make an offer on a house that already has multiple offers on it.

Every now and then I notice that someone lists a house and sets a deadline for the highest and best offer when they have no offers.

I found this in the comments of one listing: “Highest and best due by 8 pm Saturday 4/6/19”. The house is still on the market and the comment likely scared away some interested parties, before and on April 6th.

It isn’t a good idea to give a deadline and ask for highest and best offers when there are no offers. The strategy doesn’t generate offers and actually makes it look like there is something wrong with the property. Maybe there was an offer that fell through? Why is the house still on the market after the deadline?

The house can only be sold once and as I have mentioned in previous posts often the multiple offers are almost identical to one another.

Longer inspection period may benefit sellers

When buyers make an inspection contingent offer they need to specify how long the inspection period will be. I encourage my buyers to ask for a ten-day inspection period. Often sellers prefer a shorter period and will counter.

Sellers mistakenly believe that a shorter period is in their best interest. If something goes wrong they can get the house back on the market quicker and perhaps get another offer.

A shorter inspection period for the buyers also means a shorter period for the sellers. If the buyers are unable to get an inspector because inspectors are super busy during the home buying season the inspection might be scheduled on day 4 or 5.

If the buyers find an issue the sellers might not have enough time to find out how much a repair might cost or do any research to find out if the repair is needed. Sellers may end up saying yes or no to a repair that ends up being expensive or unnecessary or both.

When the inspection period is too short and sellers agree to repairs without at least researching the cost or checking to see if there is someone who can do that work they may be in for a surprise when they get the bill or find out that the work can not be completed for months.

This time of year contractors and inspectors are busy. Getting work done can be a challenge and getting an estimate quickly isn’t always possible.

Inspections slow down the home buying and home selling process but they also help protect both buyer and seller. After the inspection, all parties have an understanding of the condition of the house.

Either party can ask for an extension of the inspection period during the inspection period if needed.