Today in Cincinnati Real Estate

For Buyers. For Sellers. And Everyone Else.

The Market’s Crazy. What’s a Buyer to Do?

glowing-light-bulb-standing-out-from-the-crowd-picture-id1139703398

We’re metaphor-ing here today folks. See all those lightbulbs, and one standing out shining brightly??  In today’s super competitive real estate market, when sellers are looking at 7, 16, 21 offers (on the first day), you want to be the shiny bulb in that pack of offers. You want to be the one that sellers can’t help noticing and loving.  It’s not easy, and quite honestly it’s getting harder each passing day. While there are no guarantees, there is hope!

First, a story.  Several-but-not-that-many years ago, my buyer clients were the first ones in to see a fab, fab, fab new listing. They loved the house! It was one that had been priced, as you sometimes see, with $900 at the end of the price. Like $499,900. We decided the buyers were NOT going to try to negotiate a lower price with the sellers (this was still a thing that happened then), and they weren’t even going to offer “just asking price.” Instead we made a symbolic goodwill gesture of rounding the price UP by $100, and making their offer $500,000.  And we asked for a quick response from the sellers, by that afternoon. The buyers got the house!

Fast forward to the current market.  I’m aware of a recent buyer who made an offer $21,000 over asking price (which was their top possible dollar), and they DIDN’T get the house.  The listing agent revealed they weren’t even close to the one that prevailed.  Which makes that $100 goodwill gesture above seem so fascinatingly…um… antique.  And nearly incomprehensible, as if it is speaking in some ancient real estate dialect.

(I feel like I should leave a pause here so you, Current Buyer, can go outside and scream loudly….I mean REALLY LOUDLY…and then come back in and sit down to continue reading with a nice glass of wine in your hand. It’s ok if you need to be mumbling, “it’s not fair, it’s not fair.” You’re entitled. Take your time. I’ll wait.)

I offered that $100 story NOT to torture you, Current Buyer, but as a backdrop for my basic premise: Things Change and You Should, Too.  The purchase I mentioned happened a couple years back, but is by no means ancient history.  I note it as an example of why it’s important for you to continue to update your strategy as the market changes.  The buyers who are offering as if we are still in that “old” market are not apt to be successful.   I am literally, every single day, seeking to develop  new approaches and new strategies to help clients achieve their outcomes. Truly every day, because the market keeps changing and evolving. What was useful and clever “yesterday,” may be ineffective by next week.

Another story: Sitting with sellers recently, as they reviewed LOTS of multiple offers for their home.  Most of the offers were great, some were truly stellar, and (quite surprisingly) one or two were utter non-contenders. They came in low on price (on a house that was appropriately priced) and were asking the seller for the sun, moon and stars. They were way out of sync with what could be expected in this market. Things had changed, and their offers…hadn’t.  Those non-contender offers were very “retro.”  They might have worked in another time, but not in current circumstances. Their offers got one glance from the sellers, and no further thought. No buyer sits down to write an offer thinking it will be so readily dismissible.  But honestly those two offers looked like they weren’t even trying, while their competitors were trying very, very hard.

Another realization: sometimes perfectly good offers get turned down. The folks who own the home can only sell it once. And while they may see some out-of-touch clunker offers, they are apt to be looking at a whole pile of offers that are truly wonderful.  They can only choose one buyer. So think back to that pic of the lightbulbs: maybe not all the other bulbs are off, maybe those others have some truly decent lumens in the game. Still, you can aim for ways to shine brighter.

What should you do?  Talk in-depth with your agent. If your agent is knowledgeable, creative and honest, they should be able to help you craft an offer that will be your best shot. There are a LOT of variables in a purchase contract, and you can aim to make as many as possible dial up your wattage.  Of course it’s about price, but it’s rarely only about price. 

I’ve recently been doing “Contract Bootcamp” with my new buyer clients. Well in advance of being ready to make an offer, we go through the pages and pages of the purchase contract, dissect all of their options for all of the junctures, and talk about what might work for them.  The goal is an offer that shines brightly to the sellers, but also is marked by solid decisions for the buyers, choices they can live with and feel good about. Some contract tweaks are easy  to make; they are easy for the buyer to accomplish, are impactful, and sometimes these cost them NO DOLLARS.  Some contract tweaks are more dramatic, but also potentially more risky. So it becomes a matter of brainstorming various “recipes” that might work for each buyer…and how they might fit with the house they choose to bid on.

Doing this Bootcamp in advance gives the buyer some time to ponder the options, come to some comfort level about what they might/might not be willing to do, and then when it’s time to actually write the offer they are proceeding from a position of greater confidence.  Because of the INTENSE speed of the current market, buyers may have to make quick decisions on each new listing they see, and of course the pressure of this speed can amp up the anxiety level.  But having done some of the brainstorming in advance helps to pull that level down a bit.  It’s remarkably good when buyers have already done the advance work to ponder how they might sculpt an offer, and then we can just (relatively) calmly make a few final decisions and fill in the blanks in a way that makes sense for this particular house, is comfortable for the buyers, and still is “playing to win.”

Your agent should be able to offer you good guidance on how to construct your offer in this current super-heated environment.  Ask them what has worked for other buyers they’ve worked with.  Ask them how they’ve seen their seller clients respond to various offers when reviewing multiple offers.  I know I love the “cross fertilization” from working with about half-and-half sellers and buyers; what I experience on either side helps keep me up to the minute on how things are playing out in the wider market, and helps me provide good insights to all my clients, whether they are buying or selling. I think it’s useful for buyers to understand the current seller experience, and for sellers to grasp the how buyers are tackling the market challenges.

At the end of  looking at multiple offers, sellers often just have to take a leap of faith, and pick the one they think is mostly likely to get the finish line (closing) with the best possible outcome all around.  Sometimes they  need to split hairs among the offers to make that decision.  And sometimes one offer is just so clearly the brightest-shining bulb.  So when I work with buyers we aim for both: we’d love to be that one standout shining bulb, and we are completely happy to be the ones who quietly split enough hairs the right way throughout the whole offer to make their overall bid glow so very brightly. 

Website: http://www.sibcycline.com/Lgoldman

Email: Lgoldman@sibcycline.com

On Facebook: Laurie Simon Goldman, Sibcy Cline Realtors

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