We Tell it Like It Is

With all of the low-priced foreclosures & short sales this year, along w/the $8,000 tax credit, there have been a ton of properties that have had many buyers submitting offers on them at the same time. Here's how a situation like that is handled normally:

A home goes on the market & the seller's agent suspects there will be multiple offers submitted, based on the low price vs. good condition.

Side note: Oftentimes, sellers & their agents will purposely price a home low with the intention of getting many interested buyers to compete against each other for the home; bidding over the list price for it and ending up selling the home for $10,000+ more than the original price.

Most of the time, the seller's agent will establish a date that they will stop taking offers and advertise that date to the other agents when they see the listing online. So, buyers will have a certain amount of time to go and see the house and then submit an offer.

Legally, if there are other offers on the home, the seller's agent has to publically disclose that; preferably (as a courtesy) before a buyer goes to see the home. They DON'T have to disclose how many offers there are or how much the offers are for. Sometimes, they will tell me how many offers there are so far, but they will never tell me how much they are for.

So, what does it mean for you as a buyer if you are interested in seeing or submitting an offer on a home that already has one or more offers on it?

The object of the game is to submit an offer that is more desirable to the seller than the other offers that have been submitted. And, you only get one chance to impress them. The seller will only pick one offer to work with. They will not negotiate with all of you. Just one of you.

What makes an offer desirable to a seller? A buyer that wants to move in quickly (therefore, a closing date within 30-40 days) and a price that is close to what they are asking. If you are looking to get a discount on the list price, this is NOT the right situation for you!!

How do we know how much to offer if they won't tell us how much the other offers are for?

Its a total guess, unfortunately. You have to trust your agent and go with your gut instinct. Just know this: If there are more than 2 other offers that you are competing against, you will be wasting your own time, your agent's time and the sellers' time if you submit an offer for more than $5,000 under asking price. Period. In fact, I will normally always suggest to my buyers that when they are competing against 2+ offers, then the MINIMUM they should offer is the asking price. I am not recommending this because I am secretly working in cahoots w/the sellers or because my commission increases as the sales price increases (which it does, but that isn't what motivates me). Based on my past experience, the higher you offer, the more your chances will increase that you will get the house.

So, in conclusion, expect to offer at least the list price, if not above the list price if you are willing to pay more for the house. If you aren't willing to pay at least the list price for the house, if not more, then do not waste everyone's time!