This house did not have wood floors, a fireplace, built-in, granite etc. A nice, but perhaps slightly humble house. I predicted it would be a classic first time buyer house; drawing buyers with low down payments using first time buyer loans (FHA insured, or even 0% down).
I put the listing live in our multiple listing service at 10:00pm on a Thursday. By Friday at 5:00pm we had one very nice offer, with conventional financing and over $100,000 down payment. Wow.
Now, think about this from the seller's perspective for a moment. The house has been on the market for less than 24 hours. There have been no open houses, the Craig's list ad isn't in yet, no advertising placed. Do we really expect a seller to accept the first offer, that quickly? Some do. But most often, the house is the seller's biggest asset, and a seller would like to at least know the property has been on the open market and had full exposure. The seller and I agreed that we'd wait to review offers until Tuesday afternoon. That would give us time for a Sunday open house, and a few days for buyers to have a chance to look at the house.
My phone and email were barraged by buyer's agents asking if it was still available. I communicated to the agent who wrote that first offer, when we'd be reviewing offers. I told anyone who called, texted or emailed, that we had an offer, and that we'd be reviewing offers Tuesday afternoon. Over the next few days, four more offers came in. All of them had conventional loans, all of them were subject to the buyers approval of professional inspections and all of them had down payments over $65,000.
As the subsequent offers knew there was an offer on the table, I contacted the agent who wrote the first offer and let him know we had others. This gave his client a chance to re-write his offer knowing there was competition. Remember, when that first offer was written, there were no competing offers. Indeed, buyer #1 came back with a higher offer.
Did I create a "bidding war"? I don't think so. My intent was to level the playing field for all potential buyers. The agent for buyer #1 seemed to appreciate the opportunity for his client. I did not, play offers off each other. I did not make a series of phone calls telling agents if they raised their offer a tad,it might be the one. That, is what I think a bidding war looks like. And that behavior is why many agents won't submit an offer until just before the time offers are being presented. They don't want their client's offer to be "shopped", or used to get better offers. By contacting the agent of buyer #1, I did use the existence of other offers to get a higher offer.
Some would say I didn't do a full job for my seller client if I didn't shop the offers. Maybe so. But in my experience, it is rarely a good idea to push buyers to the tip top when they are in an emotional state. They'll often regret going that high, and are sure to feel entitled to "make it up" in the home inspection negotiations.
An aside, a risk with these high offers is a seller feeling invincible since they had all those offers, and a buyer feeling like they paid too much. Should any issues need to be negotiated on the inspection, buyer and seller enter those negotiations miles apart.
In preparation to sit down with my client, I prepared a cover sheet for each offer, focusing on the essentials of each offer. I printed each offer and all the accompany documents; pre-approval letter, any agent cover letter, any letter written by the buyer to the seller, signed property disclosures etc. Though I had asked for offers an hour in advance of my appointment with the seller, the last one came in 1/2 an hour before the appointment. I was racing to get those packets together.
Many of these offers were VERY similar. But there were differences. Differences in down payment, in asking the seller to pay buyer closing costs. Only one buyer wrote a letter to the seller, and boy was it a good letter. The letter made the buyer come alive and gave the seller a mental picture of who would be in the house. Including the dog's name and some verbal images of how owner and dog would enjoy the house and neighborhood brought tears to the seller's eyes. Really. I've seen some letters that include pictures of the buyers, kids, dogs etc. Corny? Maybe, but it works. This buyer letter was SO much more powerful than any agent comments about their buyer client.
In the end, my client carefully considered each offer. The highest offer was the increased offer made by buyer #1. This was also the only buyer who had written the letter and who's agent had taken the time to have the buyer sign the property disclosures and included them with the offer (most agents wait to submit disclosures until after an offer has been accepted).
Whether you are a buyer or a seller, I'd love to help you navigate this busy market. Give me a call at 503-312-8038 or email at leslievjones@gmail.com
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