The market is heating up. No, really.
Coast to coast, a much higher percentage of listings are (a) selling, period (b) selling, fast and (c) selling at or above the asking price than they have during any spring in recent memory. Don’t take my word for it — from Chicago to Orange County, Calif., local papers have picked up and started to report on the phenomenon.
Yet and still, today’s buyers hold in recent memory the real estate mountaintop and the depths of the recession; some have been waiting out the market for years, hoping for a deal, but unwilling to buy into a declining market. Others actually lost homes to foreclosure at the beginning of the housing recession and are on the comeback trail. And competition from short sale and foreclosure listings is still abundant.
Long story short, the days when every home on the market got multiple offers are still a thing of the past. By and large, the listings I see receiving multiple offers and selling for over asking on today’s market have the following ingredients (a recipe sellers can replicate if they’d like to set the stage to receive multiple offers, too):
1. Pristine and staged. The homes that I’ve seen get multiple offers in my own market recently are immaculately clean — not a whiff of anything within noseshot, so to speak — and dressed to the nines. Their photos look like something out of a home decor catalog or design magazine — like no one lives there, even if someone does. Their owners have often spent months in advance cleaning, decluttering, organizing, primping and otherwise sprucing their homes for sale with the intention of blowing the competition out of the water.
I won’t purport to capture the art of staging in a sentence, but prepacking is a good visual to hold in mind as you prepare your home. (And anecdotally, I will say that it strikes me that a large proportion of multiple-offer homes have actually been professionally staged. I’d urge a seller who wants multiple offers to explore whether there’s some level of staging service or even staging advice that is worth the investment, before dismissing it as too expensive out of hand.)
2. Low prices. The homes that get multiple offers are not priced at the top of their markets. In fact, I know that many of their listing agents and owners specifically aimed to list these homes slightly below what they believed to be the true fair market value of the property at the time they listed it. Why? What seems like it might be risky is actually a time-proven strategy for cranking up the number of buyers who come view the property.
When buyers see a beautiful home listing online for less than they’d expect for the area, they show up in droves, eager to get a great home for a great value. And the math from there is simple — it takes more showings to drive more offers.
Once these value hunters are at the place and fall in love with it, they often become willing to offer more than the asking price if they need to, to secure it in the face of competing offers, knowing that it was priced well to start with.
3. Ample exposure to the market. Part of the effect of a low list price is that it creates an auction atmosphere, the environment that churns up bidding wars. The other half of the auction equation is ensuring that the home has ample exposure to the market, both in terms of time for buyers to come see and fall in love with the place and in terms of marketing the property aggressively to reach as many prospective buyer/bidders as possible.
Ample exposure can be achieved in several ways. Professional photography. An aggressive online marketing campaign — most experienced local listing agents will happily brief prospective seller clients on what they do in this vein. One ample exposure method I’ve seen become a standard practice in my area is to create and publish an offer timeline. In my town, it’s now almost universal for listing agents to list the home a day or two prior to the broker’s open house, hold it open for brokers once, hold two general Sunday open houses and then take offers the Tuesday following the second Sunday open house.
By publishing this timeline as part of the listing, buyers are assured that they will have time to see the place and get their ducks in a row in order to compete for it. And sellers are assured that they will not forgo the great offer that might come tomorrow by virtue of taking a good one that comes in the day after they put the home on the market.
Now, sometimes, aggressive buyers force a seller’s hand, making an offer immediately upon seeing the property, despite a preset offer timeline. In those cases, the listing agent can call up all the other agents who have expressed an interest in the place and offer them the opportunity to get in the game. For this reason, and for any other important updates or changes that might come along, it’s essential that buyers and their brokers let the listing agent know if they plan to make an offer, even early in the published offer timeline.
4. Showable on demand. Hard-to-show homes just don’t sell, when there’s lots of competition. When buyers’ brokers put their home tours together, if a particular listing requires too much notice (i.e., 48 hours) or too many calls and callbacks for appointment-setting, they’re very likely just to turn to one of the other dozens of homes that’s easy to show. Anything that diminishes the chances your home will be shown diminishes the chances your home will receive multiple offers.
To get multiple offers on today’s market, in fact, a seller’s home must be showable on demand. If you require an appointment, you should keep advance notice requirements as low as possible — an hour or less is ideal. Even better is to be accommodating and let brokers show your home at their leisure — ideally, stepping out or running to the market when they come by. Allowing your broker to put a lockbox on the place and let it be shown at all times while you’re at work or out and about on the weekends will require that you keep the place in tiptop shape, 24/7, but it will also be well worth it.