Home sellers dream of receiving more than one offer and a sale price that’s higher than the list price. With inventories low in many communities across the country, multiple offers are more common than they’ve been in years.
A strategy that has become popular in areas that lack sufficient inventory to satisfy the demand is to select a list price that is lower than the expected selling price. In theory this should attract more buyers and result in a higher price.
The key ingredient for this approach to work is that the listing must appear well priced to buyers. The price needs to be based on recent comparable sales, not on the price the sellers would like to receive for their home.
HOUSE HUNTING TIP: Often pricing low pays off well for sellers. However, you could cut yourself short unless your real estate agent carries out an ambitious marketing campaign for your home before you hear offers.
Your listing should be on the multiple listing service with a lot photos that accurately depict your home. Often MLS listings are displayed on many other websites, like Realtor.com. Since more than 85 percent of homebuyers use the Internet to find a home, quality photos are essential. Buyers discount listings that don’t show any photos.
In addition to the Internet, your agent should run ads announcing the new listing in the local newspapers. As soon as possible after the listing is on the market, your agent should host an open house for real estate agents.
At least one Sunday open house should be held, depending on the listing, before you listen to offers. Some sellers prefer two open houses. With this kind of exposure you protect yourself from selling too low by accepting an offer from the first person who sees the property.
In a hot seller’s market where buyers far outnumber sellers, some buyers lose out repeatedly in multiple-offer competitions. In this case, buyers may come forth with an offer before the designated date to hear offers. This is called a pre-emptive offer.
It’s the seller’s decision whether to listen to an offer before the designated offer date. The listing agent needs to inform the seller that an offer has been written. The sellers may decide not to hear an offer until the offer date.
In this case, the pre-emptive buyer might step up to the table on the designated date and make an offer, perhaps in competition with other buyers. Or, they might not make an offer at all. Some buyers won’t bid in a competitive situation.
Recently, a buyer interested in an attractive Berkeley, Calif., home tried to make a pre-emptive offer. She had to wait until the predetermined offer date. She did. There were multiple offers and she was the winner.
In another pre-emptive situation, a buyer was told he had to wait. He did not show up on the offer date with another offer. The listing actually sold for less than the pre-emptive buyer was willing to pay. However, later the buyer made an offer on another listing in the same neighborhood, and less than a week later he backed out of the deal.
If the seller decides to change the game plan and listen to a pre-emptive offer, it’s a good idea for the listing agent to let all agents working with buyers who have expressed interest in making an offer know that the offer date has been moved up. This could result in a multiple-offer situation even before the date the seller planned to entertain offers.
THE CLOSING: Don’t ask less for your home than you’re willing to accept if you don’t receive an over-asking-price offer. It’s difficult to negotiate a buyer up on price if the buyer isn’t in competition.