How to get multiple offers in a seller’s market
What's the best-case scenario when selling your home? Selling quickly for the most amount of money you can! What's even better than that? Having more than one buyer making offers and competing for your home! The thrill of an auction-like scenario and the confidence multiple bidders gives you is unrivaled as a home seller.
Our clients have been fortunate to experience a lot of multiple offer scenarios since the seller's market began in 2012. In fact, we see it all the time. Now what separates the homes that sell quickly for 5, 10, even 20% over market value from the homes that sit on the market for six months? Well…two factors come into play; price and exposure.
Every home has a market value. Who influences that value more than anyone else? The buyers! As an agent, I don't set the value. As a seller, you don't set the value. The buyers decide what they're willing to pay for a home, through past sales and market conditions (the tighter the inventory, the more over the past comps they'll pay). Based on these past sales and market conditions, it's second nature to me to be able to show you what your approximate market value is when you call me over to sell your home. Once we establish that, it's now time to decide on a list price.
So there are three pricing strategies.... 1) pricing with a "buffer" 2) pricing to the market value and 3) pricing UNDER market value.
1) This is when a majority of sellers say this to me: "ok I agree it's worth X, so let's price it at X plus Y (so we have Y as 'wiggle room')". I get the logic, and for many years that's how this sort of thing was done. In today's market, this strategy can end up causing the house to sell for X MINUS Y or Z or any other number that's below market value. The longer a home sits on the market, the less attractive it begins to look. When a home's been on the market for 3 or 4 months, buyers start to wonder why it didn't sell..."what's wrong with it?". If they come see it (big IF since many will just skip right over it when they see the days on market online), they'll wonder how much less they can get it for. Their offer will often reflect the time on market, since they smell blood. Bottom line....days on market=seller desperation to them.
2) Ok we've sat down and looked at what's selling and what's NOT selling. We can now tell pretty clearly what the market value is. The thing about today's market, where the internet plays such a MASSIVE role in searching, is that buyers know what market value is too. If they like the house, they'll pay it. Especially given the real threat to lose the house. That's why properly priced homes sell for 98-100% of list price. Simple formula...it's worth X, price it at X, and it sells for X.
3) Who sells the most homes? Institutions who own lots of houses (banks, hedge funds, etc.) Do you know how they usually price their homes? You guessed it....UNDER market value. Why would you do that, you ask? Market conditions! Since the current seller's market began in 2012, there are more buyers out there than there are homes for sale. What's that create? Competition! What's competition lead to? Multiple offers! What do multiple offers lead to? Selling for at, or higher than, market value! Quickly. With the best possible terms to the seller. Why? Competition! Buyers feel the frenzy. They're excited about the property. There's a buzz that can't be duplicated by even the very best homes on the market if they're priced too high. Take two similar homes....one is decked out to the nines with the best finishes, is spotlessly clean, and priced slightly over market...they other needs updates, is dirty, and is priced under market. Which one sells first? Yup...the under market house. Probably in half the time and for market value or higher. Nearly every time!
Bottom line is....when the demand is there, there is ZERO risk of "underpricing" a home because the demand will push it up to (and often over) market value. If you want to create an undeniable buzz when selling your home, consider what your agent recommends with a "multiple offer price". I promise you won't undersell it! (or sit on the market for months wondering why no one is buying your home).