Head check: One question you must ask before you write your offer
I met with one of my newer agents the other day to review an offer he had written for one of our clients. The offer was beautifully prepared and technically perfect. The buyer had left no doubt that they wanted this house offering a full $20,000 above the asking price. It was Tuesday. The seller had instructed their agent not to present any offers before Wednesday at 8:00 pm.
I had one question for my agent. “What if this is the only offer which the seller receives?”
If you’ve been listening to people talk you might believe that “everything is selling for more than the asking price.” Well, guess what. Everything is not selling for more than the asking price. Last week, 52% of the sales reported sold at or below the asking price. I’m hearing of more instances where the seller only receives one offer and if yours is the only offer on the table, you’re probably not going to feel very good about offering thousands of dollars more than they are asking.
If I were representing a buyer in a purchase, I might suggest that we wait until the offer presentation is almost imminent before a decision is made on the offer price. Then I might ask the seller’s agent if they have received other offers on the property. They don’t have to tell me but they almost certainly will if there are other offers. If they respond by saying, “my seller has asked me not to disclose the existence of other offers,” my client and I will have to make the call as to what that means. On the other hand, we may hear, “yours is the only offer at this time.” Perhaps that might influence the price which my client is prepared to offer. It would certainly influence the advice which I would offer the client.
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Norm Fisher
Royal LePage Saskatoon Real Estate
6 comments so far. We'd love to hear your thoughts.
April 3rd, 2009 at 4:00 PM
Wow, could you imagine the fallout if the grapevine gets all the way back to the seller that there was only one offer and the buyers were $20,000 above asking.
April 3rd, 2009 at 4:00 PM
There would be hell to pay.
In this case, a second offer was ultimately written as a precaution but the buyers came out in droves and the higher offer was used. Thanks Athol.
April 3rd, 2009 at 4:00 PM
I believe I am the buyer who you were talking about in your blog above. I was very happy to have my realtor discuss with me the chance that the offer could be delivered and it would be the ONLY one. How would I feel offering $20,000 above then? We had quite a time trying to second guess the chances of there being multiple offers on this home given it was on the market for only a couple days. Up until right before the offer was handed over I wasn’t sure what I would write. I am grateful I had a realtor that spent a lot of time with me discussing it and in the end decided to go with the higher offer when we believed that the seller had already received offers. I really wanted the home and just didn’t want to take a chance.
It’s all a big guessing game. There are obviously homes that are still going for the asking price or just below. I have to wonder what they look like, though. Pretty much every home I’ve seen that was really nice went for over the asking price. All I can say is, if you really want a house you don’t have a choice but to throw out there the highest amount you are willing to pay. If you only “like” the home and are willing to keep looking, then submit a more conservative bid.
For me, I’m glad I’m out of the craziness and am looking forward to taking posession of my new home in a couple months. I have to thank you, Norm, for having Debbie call me as she and I worked very well together. As a matter of fact, I had breakfast with her this morning.
April 3rd, 2009 at 4:01 PM
Carrie, I guess the “he” thing didn’t fool you then?
Well, I had a feeling that the two of you would hit it off. She’s so much fun (She saw me at Home Depot today and yelled “hey loser” across the parking lot. Of course, I looked) and I’m feeling really thankful to have her around. I know that Debbie felt really good about working with you too. I hear that you bought an awesome house.
You’re absolutely right about the benefits of being out of this market. I said something similar in another post. While prices continue to rise, you’ll be watching from a safe and comfortable place; your new home.
Thanks so much for giving Royal LePage the opportunity to serve you and I’m glad that you got a friend out of the deal as well.
April 3rd, 2009 at 4:01 PM
In Ontario, the Real Estate Council of Ontario requires us to disclose if it is a multiple offer situation, and how many offers are to be presented, without disclosing any of the contents.
April 3rd, 2009 at 4:02 PM
Hi Angela! Nice to hear from you and thanks for stopping by.
We have no such provision in any of our regulations. We are required to seek the seller’s counsel for a decision on whether multiple offers should be disclosed. It’s not a huge concern right now but the prospect always exists that the “highest bidder” decides to withdraw their offer when they learn that others exist. That’s the primary reason why we leave the decision to them.
Take care.