Jay Mcinnes

Mobile: 604-771-4606

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Ben Robinson

Mobile: 604-353-8523

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Chase Nelson-Murray

Mobile: 604-671-5362

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How To Compete In Multiple Offers?

How To Compete In Multiple Offers?
As of writing this, I am fresh off the phone for a listing in which just sold towards Kitsilano. I’ve just been told they were on the market for a week and were accepting offers on the Monday at 6PM. That may not mean anything to SOME of you, unfortunately though, a lot of you will have seen this dreaded circumstance lately! Yes, you know who you are!!

So fast forward to today, it’s Tuesday, the day after they were ‘accepting offers’. They received 42 Offers. Just to make sure you understood that clearly, they received F-O-R-T-Y  T-W-O offers. On top of this they sold $600,000 above asking price. To add to that madness, they sold subject free.

Although 42 offers is a lot, this multiple offer situation is happening more and more in the current market. So much so, that currently I think a lot of agents are dealing with more multiple offers than not right now. 

Constructing an offer for a property is hard enough as it is. Let alone when you are forced to compete, as well as act fast. This is where a lot of people crumble. They start playing their own mind games, this looks something like asking yourself many of the following questions “Did the agent give anything away?” “How many offers do I think they’ll get?” “Did I see a lot of people at the Open House?” …..

This part of the process is rather pointless, other than noticing multiple people at the open houses. This is usually a good indicator of outside interest. But of course it is not the be all and end all. It’s rather obvious if the home looks well priced (or underpriced) and there are multiple groups looking at the home with offers being reviewed the following Monday, it’s likely you are about to find yourself in a multiple offer situation.

Rather than panic and get caught up in ‘the game’,  stick to the following steps and you’ll be OK. Disclaimer here - This is not a guaranteed ‘YOU WILL WIN’ guide, but a ‘How to smartly navigate’ guide. The guaranteed you will win guide is simple, offer $1,000,000 over asking price.
Put simply, follow the below steps, in order, after you have seen the property and decide that you want to offer:

  1. Get your agent to look at comparables in the last 90 Days. This should be done on any deal to assess current market value, however if you see most comparables sold 2 months ago for $200,000 more than the listing price, you know 2 months ago it was worth $200,000 more than what it is listed it. E.G The listing is priced at $1.4M, but the comparables sold for $1.6M two months ago.

  1. Account for the market increase, if the market has been increasing month over month.

  1. Work upwards from the market value number calculated in Step 1. Discuss your personal circumstances  and what you would be happy losing at, not winning! For example, assuming the property in this example is worth $1.6M after completing step 1. You know that it will sell at a minimum for that price. So if you offered $1.65M and lost it to someone who offered $1.66M, would you be upset? If the answer is yes and you would be kicking yourself for not offering that, you should up your bidding price. Repeat this step until you get to your maximum. So if you decide your maximum is $1.71M and you lost it to someone who paid $1.72M, you would be OK with that and not spend the next few days hating yourself.

  1. Once your maximum price has been accomplished, it’s time to look at your supporting points in your offer. Can you do a pre-inspection so you don’t have to worry about including it as a subject? Can you meet the sellers preferred dates? Any little things like this to sweeten the deal can only help!

NOTE: A lot of people do the unthinkable and refuse to bid on multiple offers as they don’t want to compete or just be another statistic. This is a sign of taking the market personally. If this is you and you are not willing to let it go and do the above process, at worst we recommend putting in an offer. Assume you are the only one competing (AT WORST) and decide what you would then offer. This is an absolute worst case scenario if you cannot bring yourself to do the above, not a proven strategy for winning. Just because they are accepting multiple offers, does not mean they will get them. In this market it’s highly likely, but some do not!

Following the above can provide clarity and direction in what is typically, a high pressure scenario. It also means you can discuss and work out what works for you and what does not. That way avoiding any buyers remorse when you either lose out or win the multiple offers!

Thank you to everyone who reached out to us about this topic, we had a barrage of e-mails on this one, so hopefully this sheds some light on the topic for you. For those who have additional questions, feel free to reach out and we will do all we can to answer any unattended too questions!

Until next week,

Jay Mcinnes
T: 604.771.4606
jay@mcinnesmarketing.com

Ben Robinson
T: 604.353.8523
ben@mcinnesmarketing.com