Home inventory has declined over the last three months. This lack of inventory is creating a phenomena that we have not seen in years.
People are receiving more than one offer on their home. Two years ago you would be elated to have one offer and it might be only after you had reduced and reduced the price again to find the market.
Now we may see two and even three or four offers on a home. Today more sellers are realistic about the market and are no longer pricing their home above a price the market will bear. The result is a better price and a shorter time on the market for the seller.
What sellers are finding is that pricing at the market or slightly below the market generates prices in many cases higher than their list price. Over the last couple of months we have seen homes selling above list and selling in the first couple of weeks they are on the market. Five of the last 10 homes sold by our team had more than one offer. Again, realistic sellers and low inventory are the main reason we are seeing this in the market place.
For the buyer the home purchase becomes much more challenging. Despite multiple offers and homes selling quickly, buyers can still get more home for their money than in recent history. Great buys are still out there, but you must realize that you are competing with other buyers for a smaller inventory.
Your agent will guide you in structuring the strongest offer you can present. It is painful to lose out on the home of your dreams. I see homes lost because the buyer is not convinced there is a drastic shift in the market.
The buyer must realize that the deal is in the list price or close to it. Sellers who have not yet come to terms with this pricing model will miss the market. Buyers who do not understand this will miss the home.
If the market price of a home is determined to be $300,000 and the seller list the home for $300,000, a buyer who offers $225,000 could miss out on the home since the market may not give the buyer a chance to increase their offer.
The home is priced right for today’s market. Two offers come in to the seller during the first few days on the market. One offer is $290,000 and the second offer is $225,000. If you were the seller, which offer would you be more inclined to accept or counter.
This is also true if the seller of this home decides to “test the market” and price the home at $350,000. The difference is the seller could miss out on the buyer who is shopping for a home with a market value of up to $300,000.
It is possible that right buyers for this home may never see it since it is out of their price range of up to $300,000. This seller will most likely not see multiple offers and will have to reduce the price. Once they hit the magic number they will then be in position to create a bidding war.
The unknown is, how long will this market last? Is this the new normal and will pricing begin to reflect this change, or will a new wave of short sales and foreclosures hit the market? Time will tell.
Two homes pictured are examples of homes that were listed in the past couple of weeks and both have received multiple offers. The numbers in this article have no relationship to the offers on the two homes pictured. Both are still in negotiation and the actual numbers will not be disclosed until after closing. Both sellers as of this writing may accept additional offers for consideration or for backup.
Estate sale Multiple offers: 4979 Young Arthur Terrace
Multiple offers: 4032 Jones bridge Circle