How Many Offers?! A Real Estate Market Update for Sellers and Buyers
Updated: May 13, 2021
Thanks for taking your time to read through this update. The whole goal of this blog is to help you understand two things. First is to have realistic expectations of what your home should experience if you are to put on it on the market today. Second is to know how to create a competitive offer to up your chances of getting a home under contract. Both are very essential to help in getting your home sold for top dollar and to secure a future home.
It has been a couple of months since I gave you an update on the market, and in this market there is significant changes that occur in a small amount of time. So we are overdue to have a look at it. It's about a five minute read. First I will provide numbers and statistics to help you understand the level the market is at. Second I will highlight multiple offers and ideas on how to navigate them safely. Third is to talk about ideas on how to make a competitive offer.
First, it's time for the numbers. I enjoy looking at statistics and seeing where the market it at. The numbers will tell us information about the market and will help you in deciding what avenue to take for your future. I'll start with some simple numbers. Please note that these numbers have to do with Brick Ramblers in Brigham, they don't reflect the whole Brigham Market.
Those are very few numbers to compare but it gets me asking some questions and tells us quite a bit. So I first want to point out that the # of homes sold is very similar to last year. Just a one house difference, but yet there is talk of a housing shortage (that talk has been going for years but has increased a lot this year.) What's different this year from last year?
Also take a look at average sold price. Wow! Good for you! In one year making $56,000. That's incredible for the home owner. Of course it doesn't really count until you sold your home, but at least you have a good chunk of equity.
So here's the questions I ask. Why the big increase in price? What changed in just one year. That answer is found in the Days on Market stat. So to clarify, that stat is just saying an average amount of time a home is on the market before it goes under contract to be purchased. Days on market are less than half from last year, and honestly its lower than 12 days. There were some outliers in the data that pulled the statistic higher than it should be. Most homes are under contract in less than a week if priced correctly. So that number is telling us what is increasing home prices. There is an increase in demand for homes.
So we're selling the same number of homes but twice as fast. Its not that there aren't any homes for sale in Brigham, its that they go under contract so fast that it appears that we are low on the amount of homes for sale. Really we are moving the same amount of inventory. So there is an increase in buyers! Where are they coming from? I don't know. Some say it is out of town buyers and others say it is the younger generation not moving out. I do not have access to those stats but what I do know, is that homes are selling fast and for a lot of money because people want to live here and are willing to pay higher and higher to make that happen.
Second point I wanted to hit is receiving and navigating multiple offers. With a big increase in buyers and homes going under contract so fast, multiple offers on a home is the new normal, not the exception. It takes a lot of work and knowledge to fully review and highlight the different offers and their details. My first suggestion is to set an offer review time. Set a date and let everyone who tours your property know that you will be reviewing offers at this day and at this time. Be firm with that and keep to it. Some people will try and push you to accept their offer so they wont have to compete but to get the most offers; therefore the highest offers; review at a later date (preferably after a weekend.) That will help you know your deadline.
Next you want to decide whether to share information on your offers. I suggest not to for two reasons; it puts you in a gray area sharing other people's information and it could keep you from getting someone's highest offer.
Now make sure to announce to all interested prospects that you have multiple offers(if you have them) and when you're reviewing. You want to disclose that so they know to put in their highest and best offer. Then create a net sheet for each offer going over how much you'll profit after all of your sales expenses and any other important details of each offer. (Such as amount of earnest money, conditions to purchase the property, type of loan, etc.) There is a lot more that goes into an offer besides just the total sales price.
Finally let's talk about how to create a competitive offer in this market. There is not solid way of getting the statistics on how many offers homes are receiving. Here is what I know from my experience on the market and talking with fellow Realtors. Homes are still averaging around 4-10 offers. Depends on the home, condition, location, and time of week (weekend gets more interest). But typically we're seeing around 4. So a little lower from what I was seeing and stated in my March newsletter. In fact I would state the market is slowing down just a little and we aren't seeing quite as competitive offers. Now with that said, you'll still need a competitive offer. Of the 22 Brick Ramblers that sold in 2021, 3 went for less than asking. (That doesn't mean that they were offered less than asking, just final sales price was less.) 12 sold for over asking, and 7 sold at asking price. That gives us a portion of the picture but doesn't tell us what people offered to secure the contract. So with knowing that there are multiple offers, that majority of homes are selling over asking, and from my feedback I've gotten from other realtors here is what we are seeing contribute to winning offers.
Earnest money that is 1% of asking price and is non refundable
Quick deadlines for due diligence and finance and appraisal
An above asking price offer (sometimes quite a bit)
An above appraisal guarantee (for if it doesn't appraise at the offer price)
Short Term Lease-Back (Depends on Seller's Needs)
Not asking for a Home Warranty
Conventional Loan or Cash
Those are some key things to think about when offering. I can't tell you a solid number amount to offer over because you never know what the other person is offering. I would suggest going around $10,000-$15,000 over but it depends on the type of house you're buying and price range.
My biggest suggestion when offering is to try and keep it as simple as possible. You'll see many complicated and different offers but sometimes that will overwhelm the seller or give them a bad association with your offer. Common complicated offers are escalation clauses or offering to pay seller's closing. Really it just confuses the whole offer and can ultimately harm it. So I suggest keeping it simple yet aggressive. Also if you have any questions about any of the details I am talking about, don't be a stranger! Email, text, or call! I'm more than happy to go over the process and any details you are confused about.
Again I appreciate your time. Please explore my sight and see what else I have to offer. If you enjoyed this newsletter. Subscribe! It's free and is just a weekly email, can't hurt you and won't annoy you too much.