Wednesday 2 September 2015

When you offer over list price and it's "too low" to accept

Through the second half of the summer, sales numbers slowed down a bit, but the pace has picked back up and there is certainly still some froth. 

The other day, I viewed a house with a buyer client.  We saw the house in the morning and they were reviewing offers that evening.  When we went through in the morning, there were five offers and my buyer decided not to enter the competition.  I heard through the grapevine that by the time offers were presented, there were eighteen!  Naturally the property sold far over asking price.

Unfortunately, this market is giving some sellers unrealistic expectations.  We went through another house.  At the time we saw it, offers were being held off for another four days, until the Friday.  Inquiring with the listing agent, I learned there were no offers at that time, but there had been one bully offer (trying to push through early, before the offer date) that had been rejected. We decided to make an offer and register for Friday.  But just five minutes after my buyer told he wanted to put one together, I got an email from the listing agent they had an offer.  And then it turns out to be another bully offer, being presented that night.  So we rushed to get ours together and sent.  We were "only" going in $10,000 over list price so I wasn't sure what to expect.  Bully offers are usually high and firm - they have to be to entice the seller to accept immediately rather than waiting for the offer date.

But, much to my surprise, the listing agent informed me later that the sellers were rejecting BOTH offers as too low.  We don't know what the other offer was, but our offer at $10,000 above list price was "too low".  And the sellers were no longer going to look at early offers. 

Obviously, they're playing the market, listing where they think is a low price to build up interest and hopefully a bidding war.  But with two bully offers - and one of them in competition - not yielding acceptable offers, they may need to review their thinking, in my humble opinion.

Yes, competition is good for sellers and it can yield great results. But there is never any guarantee, even in this market.  They may succeed yet, but trying to force it can backfire.

And of course if you're buyer, I would continue to urge calm and rational offers, not giving in to sellers demands - some of whom may not be entirely reasonable.

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