A Seller’s Market Attracts Multiple Offers
In today’s market it’s not unusual for a reasonably priced property to attract a number of competing offers. What’s more, because of the shortage of listings, causing a seller’s market and a healthy buyer demand, we’ve seen progressive changes regarding competitive offers.
The Bidding Has Evolved
In the Niagara region, in the initial stages of this seller’s market, competing offers would result in some homes selling for list price or one to five hundred dollars over. In some areas the bidding then progressed up to $1,000 and $3,000 over list. Recently, competitive bidding in certain areas has evolved to $5,000 and even $10,000 above list price, while other areas are averaging $15,000 over list. In some instances the numbers are even greater.
Some Buyers Exclude a Financing Condition
As well, buyers are making concessions with conditions. Some are getting pre-approved for their financing before making an offer, allowing them to exclude this condition in their offer, making it more appealing to the seller. Yet some sellers are anxious about cash offers and want third party proof that the money is in place to close the transaction. Sellers are also leery of a possible bank appraisal that might come in lower than the agreed price.
Others Exclude a Home Inspection
Others may opt to exclude a condition for a home inspection. Buyers, of course, offer such a concession at their own risk. What if eliminating a home inspection results in unforeseen costs after ownership? Asking to do a pre-inspection before submitting an offer is a good idea if time permits. Sellers react favorably to offers not subject to a home inspection as they can sometimes uncover deficiencies that even the seller is not aware of.
Additional Concessions Buyers Make
Recognizing that sellers can have other concerns besides price, buyers might also do any of the following:
- Choose to move into temporary lodging (with family or a rental) to accommodate a closing date most suitable to the seller,
- Give up chattels they might have otherwise asked for or are included in the sale,
- Offer a large deposit to accentuate their seriousness. The higher the deposit, the more they stand to lose and the higher the incentive to close the deal.
These are some of the common compromises buyers make.
Bidding Wars Create Buyer Frenzy. Buyers often get into a buying frenzy to win out because they competed over and over and lost out on different properties. It’s an emotional reaction dictated by the heat of the moment, though not always in a buyer’s best interest. One of our salespeople had this insight: “If a home is overpriced it won’t sell; if it’s market-priced it over sells--hard to figure.”