It never occurs to agents to properly conduct a bidding war where the market decides the winner.
Instead, they choose the easy route and just collect offers, itemize them on a spreadsheet, and then point out a winner to the sellers. It is an ego-boosting choice that fares well around the brokerage’s water cooler, but is likely to leave loads of money on the table.
Agents who deny open bidding and just process one round of blind offers are clerks, not salesmen.
By the time they got the last offer, Quinn and Daryn Shapurji had received 54 bids on their four-bedroom, single-family house in Fishers, Ind., in just three days. Ms. Shapurji said they felt totally overwhelmed — and a bit melancholy.
“We felt bad that we had to say no to so many people, because we got a lot of beautiful letters from buyers saying how much they loved our house and why they wanted to live in the area,” said Ms. Shapurji, 32, a closing coordinator for a home builder. “Some buyers had already struck out on five or six homes.”
Chris Dossman, the couple’s real estate agent, suggested they take a cash offer that was $25,000 above their home’s list price of $220,000. “It wasn’t the highest offer they received, but the cash buyer waived the appraisal, so we knew that we weren’t going to have an issue with the home closing from a financing perspective,” said Ms. Dossman, an agent with Century 21 Scheetz based in Indianapolis.
“Fifty-four offers is by far the highest number of offers that I’ve ever received for a listing,” added Ms. Dossman, who has been an agent for 15 years.
“We’re seeing an inventory crisis,” said Katie Wethman, a Washington, D.C.-based real estate agent at Keller Williams Realty. Indeed, total home supply at the end of March sat at only 1.07 million units, down 28.2 percent from a year ago, according to the National Association of Realtors. The association’s data also found that homes typically sold in a record-low time of just 18 days in March, down from a 29-day average in March 2020.
Still, sellers face a challenge: “Getting inundated with offers can be overwhelming, and it can make it harder for sellers to choose the best offer,” said Alicia Stoughton, a real estate agent and designer at Keller Williams Advisors in Cincinnati, Ohio.
Why? Because “the highest offer isn’t always the best offer,” Ms. Stoughton said.
Here are the factors sellers should consider, in addition to purchase price, when evaluating multiple offers.
“Cash is king,” according to Nancy Newquist-Nolan, a real estate agent at Coldwell Banker in Santa Barbara, Calif. “I often recommend sellers take a cash offer, even if it’s not the highest offer.”
Still, mortgage buyers aren’t completely out of the running, said Ms. Wethman. “If you’re confident in the buyer’s lender and their ability to get approved for a mortgage, there’s not a lot of risk taking an offer from a buyer who’s getting a loan,” she said. Her advice to sellers? “Do your due diligence on the lender who is providing the funds,” she recommends.
This is a step where sellers can lean on their listing agent, Ms. Newquist-Nolan said. “I call up the lender and ask how qualified the buyer is for their loan,” she said. Moreover, “some lenders are notorious for dragging their feet and missing key deadlines.”
The best approach that sellers can take when weighing offers, Mr. Lejeune said, is to compare them side-by-side. His strategy: “I present offers to my clients in an Excel spreadsheet that specifics the offer price, loan amount, type of loan, contingencies, and other important metrics,” he said. “It’s basically a cheat sheet for sellers.”
Ms. Dossman is also a fan of presenting offers in a spreadsheet. As she puts it, “You want to have all the information in front of you when you’re making a decision.”
Many buyers attach personal letters with their offers to try to sway the sellers in their favor. But some real estate agents don’t even show sellers these letters when they present offers to avoid the possibility of unlawful bias against a buyer. But Ms. Dossman said she will share letters after vetting them to make sure there isn’t any information that could raise the potential for fair housing violations.
The trend of paying over the list price continues!
NSDCC Detached-Home Sales, % Closed Over List Price
January: 38%
February: 43%
March: 53%
1/2April: 57%
Most sellers and agents are happy just to get 1% to 5% over list. There were only 18 of 173 (10%) that sold for a double-digit percentage over list. The big winners:
Most % Over List Price
List Price
Sales Price
Percentage Over List Price
$969,000
$1,210,000
25%
$1,399,000
$1,700,000
22%
$1,099,000
$1,316,000
20%
$1,425,000
$1,675,000
18%
$3,000,000
$3,500,000
17%
$1,499,000
$1,750,000
17%
$999,000
$1,160,000
16%
NSDCC Sales, April (First Half): 173
(the number of sales was 45% higher than same period in 2019)
The real estate market was boisterous in last half of 2020, which made it easy to predict that once we got past the election and into the new year we’d probably see the Greatest Real Estate Frenzy Ever.
Let’s use February 22nd as the day the frenzy really kicked in.
It was the day that this home was listed for sale, after a troubled past:
2005: $679,000 Sold (vacant lot)
2007: $550,000 Sold (vacant lot)
2008: $2,000,000 borrowed from WaMu
2009: House built
2015: $2,137,500 WaMu/Chase FORECLOSED
2016: $1,930,000 Sold
2018: $2,875,000 listed for sale for the next 18 months
2019: $2,044,000 Borrowed in January
2019: $2,225,000 last list price before FORECLOSED
The trend of paying over the list price is increasing.
NSDCC Detached-Home Sales, % Closed Over List Price
January: 38%
February: 43%
March: 53%
Most sellers and agents are happy just to get 1% to 5% over list which will cover some or all of the commission. There were 22 of 244 (9%) that went double-digit over list. The big winners:
Most % Over List Price
List Price
Sales Price
Percentage Over List Price
$1,299,000
$1,655,000
27%
$989,000
$1,200,000
21%
$749,000
$900,000
20%
$1,325,000
$1,580,000
19%
$1,900,000
$2,255,551
19%
$1,535,000
$1,800,000
17%
$2,800,000
$3,200,000
16%
$2,198,000
$2,510,000
14%
$2,695,000
$3,075,000
14%
NSDCC Sales, March: 244
Average List Price: $2,285,792
Average Sales Price: $2,252,883 (99%)
Median List Price: $1,788,500
Median Sales Price: $1,810,000 (101%)
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Over List By Price Point:
Under $1.0M: 6
$1.0M – $1.5M: 44
$1.5M – $2.0M: 39
$2.0M – $3.0M: 32
Over $3.0M: 8
A real bell curve there!
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The most sales over list are happening right where you’d expect:
Most Sales Over List By Area:
SE Carlsbad, 92009: 32 of 41 sales were over list (78%).
Carmel Valley, 92130: 22 of 32 sales were over list (69%).
Encinitas, 92024: 24 of 41 sales were over list (59%).
This is the other article that several people sent in – thank you!
Rob Dawg wondered if these cases of dozens of offers could be tempered by putting the right price on these from the beginning. The agent’s Zillow profile shows 30 sales in the last year – and 26 of those were seller sides which is great and it means she knows something about pricing. But I think when you are pricing a home on the lower-end of the market these days, you can add easily 10% on top of the comps and buyers won’t notice – because other sellers are already doing it too. Note: the agent didn’t take the highest offer here either.
Ellen Coleman had never received so many offers on a house in her 15 years of selling real estate.
She listed a fixer-upper in suburban Washington, DC for $275,000 on a Thursday. By Sunday evening, she had 88 offers. “The offers just kept coming,” she said. “I felt like Lucy with the chocolates. I’m thinking, ‘This is just out of control.'”
Of those 88 offers, 76 were all-cash, said Coleman, who works for RE/MAX Realty Centre. There wasn’t even enough time for all of the bidders to visit the property. She said 15 offers were sight unseen.
The four-bedroom, 1,800 square-foot home sold for $460,000, nearly a 70% increase from the asking price. She said the winning bid was not the highest offer, but it was all-cash with no contingencies and it had paperwork in place.
The buyer, she said, is an investor who is likely to renovate and resell at an even higher price.
“It was a lower priced property for the area and may have been an outlier,” she said. But even her other listings have typically been getting closer to 15 offers. “Several people came in wanting to be homeowners and do the repairs themselves. There is such low inventory out there and people feel like that is a way they can get into a home.”
Thanks to the readers who sent in this article – and it makes you wonder how many offers any house for sale would get if listing agents didn’t shut down the showings so quickly:
CITRUS HEIGHTS, Calif. (KTXL) — A Citrus Heights home in a quiet cul-de-sac received 122 offers in one weekend on the market.
The 1,400 square feet home has three bedrooms, two baths and a spacious backyard with a swimming pool and an asking price of $399,900.00.
“People would think that it was underpriced. It was not underpriced. It was straight on with the comps,” said Deb Brittan, the listing agent for the property. “I had hoped, I thought, maybe if we get 20 offers that would be amazing.”
Barry and Anita Jackier are the sellers of the Citrus Heights home.
“We had this little friendly wager going. I’m like, ‘I think we’re going to get eight offers,” Anita Jackier said.
“I said 10,” Barry Jackier said.
They all underestimated the number of offers, by a lot.
They received 122 offers in one weekend.
“That’s 121 people who didn’t get a house. And that’s kind of heartbreaking in this market to think that there are so many buyers out there. And if you don’t have an agent that understands how to put a strategic offer in on a house and get it accepted, you’re just out burning your gas and a lot of emotional turmoil because of the nature of our market currently,” Brittan said.
Brittan says the highest offer was above $500,000, but that was not the winning offer. There were other factors to consider.
The couple is buying a home in Idaho.
They need time for the escrow to close on that home, so one big factor was they needed a buyer to wait until that happens before moving in.
“I’d like to think that the buyer that was supposed to have gotten the house, has gotten the house,” Brittan said.
The selling price of the home was in the mid-$400,000 range.
“We have so many great memories. And that’s going to be hard to let go of,” Barry Jackier said.
“But you know what I’m excited about is now another family gets to have a blank palate to make all those memories on. We are keeping those memories and they have an opportunity to start their own,” Anita Jackier said.
The couple said they felt called by God to move to Idaho and from that perspective, it’s a miracle they were able to find a home there.
“That house was on the market for three hours,” Anita Jackier told FOX40.
“So I don’t know that it’s going to slow down any time soon. And I don’t know what it’s going to take to slow it down,” Brittan said.
To provide some transparency on the deal-making on the street, here’s a review of properties that have gone pending this week. I didn’t intend to make a blog post out of it, but I had inquired about the availability of these listings, and for my own knowledge I like to ask how many offers the listings agents have received.
They had FIVE OFFERS on 1833 Willowhaven, and another similar home that listed on the same side of the street for $1,299,000 also had multiple offers. A good example of how a few more listings in the lower price ranges should all get picked up.
They had EIGHTEEN OFFERS on this one, because it checks most of the boxes. Well-priced single-level with nice private yard that’s been tastefully renovated. The 17 other buyers will be battling it out for months on these! I commend the listing agents for providing enough access to accommodate that many people and offers.
Susie says the Boise market is on fire, Noodle said that every house in North Phoenix sells in 3-4 days, home prices in Austin are similar to what they are here (according to one buyer) and even Kayla is seeing multiple offers again in Manhattan!
The potential sellers here who want to list their house for sale so they can leave the state have to be concerned about buying their replacement home, if they haven’t bought one yet.
How many will give up and say, “heck, it’s better here anyway”, and pack it in, instead?
Will a surge of supply over the next 3-4 months – when we need it the most – be stymied because of the difficulty with buying a home elsewhere?
As crazy as it is right now, it could get crazier! It probably will!
In the last couple of weeks, you may have seen prices on new listings reflecting today’s exuberance.
Homes that are priced attractively will generate the crowds, and likely get bid up over list.
Others are listed for a price that raises an eyebrow. In areas where we’ve seen 10% to 20% appreciation in the last six months, are sellers packing that much on to their list price PLUS another 5% to 10% – or more?
How do you recognize the difference?
The difference between a bidding-war listing, and a seller just daring you to pay their price?
Thoughts for Buyers Wondering If The List Price Is A Dare:
Compare to the Pendings
If you only consider the sold comps from the last six months, you probably won’t buy a house in this market – one which should last at least a couple of more months before there’s any possibility of unsold listings starting to stack up.
Who is the Listing Agent?
Known and successful listing agents aren’t going to list a home for some crazy too-high price. They know it’s better to keep it attractive, and let the market do its thing. If you’ve never heard of the agent and he acts more like a kook from Montaluk, then know that their list price is more likely to be outrageous.
Quiz the Listing Agent
The number of showings doesn’t matter as much – the number of offers does. If there have been 50 showings but only 2-3 offers, it means the price turned off 90% of the buyers. Unfortunately most listing agents are shutting down the showings so fast that it’s hard to get an accurate count – or to get them to fess up.
The Age of the Home
The older the home is, the less likely it’s worth a premium. The floor plans aren’t current and the upgrading over the years is likely to be inconsistent – those will be even more difficult to sell in a normal market. They do tend to be in the better locations, so the home’s age isn’t a hard stop. But typically the older homes are less likely to be worth a big premium today, let alone in the future.
Days On Market
If you’re not sure if the price is right, then wait it out. The initial frenzy dies off quickly, so if you don’t need this house like you need air to breathe, let ride and see if it goes unsold for the first 7-10 days. It’s really the only way to know for sure if the price is wrong.
Stay Picky
Only pay a huge premium if it’s the perfect house for you. There’s a decent chance that appreciation flattens out over the next few years and you end up high & dry for a while. But you don’t care because you’re in it for the long haul, so make sure this home fits ALL your needs. No compromise.
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The market for the best homes has been hyper-competitive for years – it’s only because of the covid/low-rate cocktail that buyers are flooding the streets in numbers we’ve never seen before.
Maybe you should wait it out? Aren’t all sellers daring you to buy now?
You’re just buying homes today at tomorrow’s prices. If prices go up another 10%, and appreciation flattens out and you can score a deal at 10% off, then you’re only back to where you would have been today.
