Given the scarcity of listings in the Toronto market these days its understandable that we touch on the topic of multiple offers from time to time. It’s probably because no two scenarios are ever the same but last week, at our weekly Mastermind session, the question turned the multiple offer topic around. When listing a property is there an optimum number of offers that our pricing should attract? We went around the room to get everyone’s opinion on the matter.
History dictates that we only need one good offer to sell a home so theoretically we should price the home to attract that one buyer. Unfortunately (or fortunately) the cards are stacked in favour of the Seller so even pricing fairly can lead to two or three or even four offers because there is just no sure way to predict how desperate a buyer might be but the question remains, do we try to price to get one offer or do we under price to attract multiple offers and hopefully push up the price for the buyer? (and if so, by how much?). If the choice is to under price to create excitement then how low do you go and how many offers are you hoping to attract? We had several opinions on the topic because pricing really is a moving target. The answers ranged from 2 to 10 offers.
There is a slippery slope to all this if you are a Seller, and I have written in the past about a seller who only got one offer on her property on offer night and was totally annoyed with the agent despite getting full price. The fact remains that underpricing can be dangerous. Sometimes we price a home thinking we have determined perfect market value and then we are hit with multiple offers. Sometimes we list under market value and get only one offer if at all, and then there are those cowboys who list hundreds of thousands under value and hope to generate 50 or 60 offers. But not getting an offer on offer night puts an agent on the defensive right away. The client is looking to you for answers. Where are all the offers? What’s wrong with my house? In this hot market why isn’t my house selling for over list price? Simply put, there are just too many variables to know for sure and it could be as simple as it’s raining or the buyers couldn’t get baby sitters.
So when it comes to the list price, know your competition and nail the market value. Under price just a little to create some interest but not a flood of buyers. Take the guesswork out of the listing and have the home inspection done well in advance.
In the end, everyone should know that it’s the Seller who determines the final list price but it is up to the agent to conduct an in-depth market evaluation and then determine the right strategy to get the Seller the most money.
mark mclean is the Broker/Manager at the Bosley Real Estate Queen St W office and President-Elect for the Toronto Real Estate Board. The opinions expressed here do not reflect the opinions of TREB or Bosley RE.
I really don’t want to sound like a broken record, but, OMG, if I have to utter those words again I think I might scream.
Here is the scenario. An agent recently took out new clients to look at houses. They had built up a nice rapport, spent some quality time together and had a BRA signed. Things were looking good. They found a house they loved. The agent knew it was competitively priced and that there were going to be a few people bidding on the house. He spent the better part of an evening explaining the process, encouraging them to get a home inspection done before offer night, to confirm with their mortgage agent that they had their financing and then showed them some comps to help determine a good price to go it at.
After their very long conversation, the agent headed back to the office to type the offer, then it all went sideways. The buyers wanted to load down their offer with conditions; condition on financing, condition on home inspection and condition on lawyer review of the offer. Oh, and one more thing, after much deliberation, they want to offer $15,000 below the list price. That sound you hear is the screeching of brakes. You and I know this deal is going nowhere fast. The agent calls me looking for encouraging words and the magic spell that will make it all go away. Then I have to say….”well, unfortunately, your clients need to lose this deal so they can understand the process and learn to take your advice “. I HATE those words.
The truth is, new buyers don’t need to lose on any house if they don’t want to. Often their decisions to load down their offer with conditions has more to do with having cold feet. Still, they need to listen to you and THAT means trusting you. Of course you will run into situations where the client is an armchair Realtor who thinks he knows more than you, or you might be unfortunate to work with clients whose father says something like, “are you crazy? you can buy a mansion in Peterborough for the same money”. So what can you do to prevent your manager from uttering those annoying words? Try these five tips.
1. It all comes down to giving the clients accurate information. Show them the numbers (they don’t lie). Provide them recent comps and differences between asking and sale prices.
2. As much as it hurts, you need to be brutally honest about the process. Give them a primer on the market. In case they are new to the city, or have been living under a rock, show them newspaper articles that emphasize what is going on in your local market.
3. Document real life examples of clients that you have worked with or talk about situations where others have lost because they weren’t prepared.
4. Have home inspectors at the ready and explain that the home inspector will save you money by showing you the true condition of the house. It is a needed expense of buying a home.
5. Have some serious dialogue with their mortgage broker. Explain your familiarity with the market. Put their mind at ease that the house you sell them will appraise with ease.
Naturally, there are no guarantees, but a few preventative measures may limit the times you have to lose a deal to prove a point.
mark mclean is the Broker/Manager at the Bosley Real Estate Queen St W office and President-Elect for the Toronto Real Estate Board. The opinions expressed here do not reflect the opinions of TREB or Bosley RE