As you might have heard by now, multiple offers are the new black. Well – kind of; if your own home is on the market or soon to be, it can seem like you break your back to prepare your home and it lags and lags on the market while all the cool kids houses and their sellers sit idly by, making champagne toasts while they are inundated with more offers than they can shake a stick at.
Let’s bust one myth: getting multiple offers rarely happens by luck alone. That’s good news for you, as it means that generating multiple offers is more of a science than an art. And that, in turn, means there’s a whole lot you can do to replicate these results with your own home’s listing.
Here are five elements I nearly always see in listings that get multiple offers:
#1. Listed low. As I alluded to last week, homes that get multiple offers are often sold in what industry insiders call an auction atmosphere. If you think back to the last auction you saw on TV or participated in online, you’ll remember this basic element of Auctions 101: the starting price is lower – sometimes quite a bit lower – than the final sale price.
In fact, it’s the low list or starting price that gets people excited about the possibility of scoring a great value, whether they’re bidding on an antique Chinese pug figurine on eBay or on your home. And when it comes to your home, it’s that same, low-price-seeking excitement that will cause many more buyers to show up and view your home than would have come at a higher price point.
In real estate, more showings are an inescapable prerequisite to more offers.
Now – I’m not at all suggesting you give away the farm, just that you price your home from a retailer or auctioneer’s perspective, rather than the all-too-common backwards reasoning to which home sellers so often fall prey. Work with your agent through the comparable sales data – as recent and as comparable as possible – and then do your best to list your home as a slight discount, not at a slight premium, compared to the recent neighborhood sales. That will get buyers’ attention.
#2. Easy to show. Walk a mile with me, if you will, in the shoes of the average home buyer or their agent. Let’s say there are 50 homes on the market which meet your rough specifications in terms of bedrooms, bathrooms, square footage, price range and location. You can narrow it down to your 30 top priorities to see. But you only have time to see 8 today. Now, of those 30 top priority properties, about 15 are short sales or foreclosures and you can get into them anytime you want. And the other 15 are split down the middle – half of them are available to be seen with nothing more than a single phone call. The other half require you to hurdle an arcane obstacle course of phone calls, 24 hour notice requirements, strange hours of availability and more phone calls to get an appointment to see the place.
Which would you go see, and which would get ruled out?
I am not exaggerating one iota when I tell you that your home could be priced well and marketed well, but if you make it too difficult for buyers to get in to see it, the statistical probability is that they will (a) find and choose another home from those that are more easily accessible to view, and/or (b) assume you are not motivated to sell, get irritated and pass on your home as a result.
Want multiple offers? Make sure your home is available to be shown on demand, or as close as possible to that. Inconvenient? Yes. Frustrating? Sometimes. A challenge to keep the place clean at all times? Assuredly. But, my dear reader, no one ever promised you a rose garden; decide what your priorities are and, if you decide that getting top dollar for your home is at the top of that priority list, then also decide to be willing to deal with the inconvenience involved in churning up multiple offers and getting your home sold.
#3: Immaculate look and function. The homes that get multiple offers (outside of the foreclosure arena, anyway), are those with look, feel and function that can be described in one word: covetable. You’re not trying to create a situation in which your home barely edges out the listing down the street in the hearts and minds of your target buyer. If you want multiple offers, what needs to happen is for multiple buyers to fall deeply in love with your home – enough to brave the competition and put their best foot (and top dollar) forward.
Today’s buyers are no dummies. They’ve just lived through the worst real estate recession anyone can remember, and they’re much more frugal than buyers were at the last peak of the market. To boot, mortgage and appraisal guidelines and their own smart sense of frugality prevents them from just hurling dollars at any old place. Accordingly, they are not easily tricked into competing for a home by a slipshod paint job and a few pieces of Pottery Barn furniture.
To generate multiple offers, prepare your home by ensuring it is:
*immaculate from the inside out – basements, garages and crawl spaces included
*de-cluttered and staged to the nines – including fresh paint, carpet and other things that need replacing
*in fine mettle – make sure things like doors, windows and systems buyers test (e.g., stoves, faucets, heating and air conditioning) are not creaky, wonky, leaky or otherwise dysfunctional – and if you’ve done any major home improvements or replaced any appliances or systems lately, market that fact to show off the move-in readiness of the place.
#4: Just enough market exposure. If your home is so lucky as to get an offer the first day or so on the market, count your blessings. But also calculate your opportunity costs: many buyers can’t get out to see homes that quickly – some are unable to house hunt except on the weekends! In my local markets, I’ve seen time and time again that listing agents who are skilled in cultivating multiple offers often plan from the jump to allow the home to be exposed to the market long enough for all qualified and interested buyers to see it and get their offers on the table.
And what’s more, they expressly message the calendar for market exposure, Open Houses and even the offer date and review timeline in the listing, from the very beginning. Here, it’s very common to see a listing come on the market with a calendar of 1-2 Open Houses and an offer date sometime early in the week following the second one. Ask your agent to brief you on the standard practices for market exposure in your local area.
Allowing for ample market exposure – and including the timeline in the listing – lets buyers know that they will be able to get to the property and get their offers considered, and creates some urgency, as well. Smart buyers interested in properties like this will take care to have their agents contact the listing agent as soon as they think they may want to submit an offer, though; this way, if someone makes a so-called ‘pre-emptive’ offer, you’ll get a call from the listing agent and a chance to compete.
#5: Sellers who are willing to revise. If you think most of the tips here are not for you because you’ve already blown your chance to sell for more than asking – think again! A number of times, I’ve witnessed what I call the Sweet Spot Phenomenon, where an overpriced home sits on the market for months with no bites, sometimes even through multiple price reductions. Finally, the seller lowers the price to the ‘sweet spot,’ and it generates multiple offers and sells for more than the final list price.
There are definitely homes whose sellers net more than they expected because they were willing to revise the list price downward in response to market feedback (i.e., no showings, no offers or lowball offers).
If your home’s been lagging on the market, talk with your listing agent about what sort of price reduction strategy is likely to maximize your net sale price. Hint: many more buyers are attracted by chunky reductions or reductions below a common online search price point limit than by tiny, incremental reductions. For example, you might draw more flies buyers, and ultimately more money, with the honey of a price reduction from $499,000 to $474,000 than with a series of small reductions from $499,000 to $479,000, because there is a set of buyers who may be cutting their search off at $475,000 – so a price cut below that point will expose your home to a whole new group of prospects.
For information about financing or the economy, please contact me at Bill@billnickerson.com or 978-273-3227