5 Steps Smart Sellers Take to Generate Multiple Offers
Home sales (and values) have been on a strong uptick nationwide thanks to low-interest rates, freer lending standards, and a drop in the foreclosure rate. Sellers everywhere are breathing a giant, collective sigh of relief! But for all of the buyer activity, it seems like most houses sit on one end of two extremes: they either get snatched up the moment they hit the market (with multiple offers and an above-asking sale price) or seem to languish on the market without an offer in sight.
All sellers aspire to be on the multiple-offer end of the spectrum. Fortunately, there are steps you can take to make that happen. Here are five tips to move your listing into the multiple offers zone.
1. Price it aggressively. Homes that get multiple offers are often sold in an "auction" atmosphere. If you think back to the last auction you saw on TV or participated in online, you'll remember this basic element of Auctions 101: the starting price is lower, sometimes quite a bit lower than the final sale price.
It's the low list or starting price that gets people excited about the possibility of scoring a great value, whether they're bidding on an antique Chinese pug figurine on eBay or on your home. When it comes to your home, it's that same low-price-seeking excitement that will cause many more buyers to show up and view your home than if it was listed at a higher price.
In real estate, more exposure and showings are what help bring in the most offers.
Sellers who receive multiple offers price their properties from a retailer’s or auctioneer’s perspective. Review recent comparable sales data with your Realtor and then do your best to list your home at a slight discount compared to the recent neighborhood sales. This strategy will get buyers’ attention.
2. Give buyers and brokers ample access. Put yourself in your target buyer's shoes. Say there are 40 homes on the market which meet their specifications in terms of bedrooms, bathrooms, square footage, price range, and location. And 25 of those top the list. But they only have time to see 8 today. If the buyer's broker can't get into your house today because you have so many restrictions around showing it, your home could very well miss out on a showing with this qualified, motivated buyer.
It might seem overly simple, but if you want multiple offers, it's in your best interest to have the home available to be shown every day it's on the market. Inconvenient? Yes. Frustrating? Sometimes. A challenge to keep it clean at all times? Assuredly. But consider your priorities and what is at stake. If getting top dollar for your home is at the top of your priority list, you need to be ready and willing to deal with the inconvenience required to churn up multiple offers and get your home sold.
3. Make it beautiful. Really, really beautiful. The homes that get multiple offers are those with the look, feel, and function that can be described in one word: covetable. You're not trying to create a situation in which your home barely edges out the listing down the street in the hearts and minds of your target buyer. If you want multiple offers, you need multiple buyers to fall deeply in love with your home – enough to bid above the listing price and enough to compete with others for it.
To generate multiple offers, prepare your home by ensuring it is: immaculately cleaned from the inside out – closets, basements, garages, and crawl spaces included, de-cluttered and staged to the nines – this includes fresh paint, carpet, and other items that need replacing in perfect working order – make sure that doors, windows and systems buyers test (e.g., stoves, faucets, heating, and air conditioning) are not creaky, wonky, leaky or otherwise dysfunctional.
If you've completed significant home improvements or recently replaced appliances or systems, they should be listed in the home's marketing materials! Show off how immaculate, adorable, and move-in ready your home is and tout its great working condition for the long run.
4. Expose it to the market. An offer the very first day your home goes on the market may sound like a dream come true, but it might also incur opportunity costs. Many buyers can't get out to see homes quickly and some can only view homes on weekends. Listing agents who get multiple offers often plan from the start to expose the home to the market long enough for targeted buyers to see it and get their offers submitted.
Some agents expressly include open houses and offer review dates in the timeline of the listing. It's not uncommon to see a listing come on the market with a calendar of 1-2 Open Houses and an offer date sometime early in the week following the second one. Ask your agent to brief you on the standard practices for market exposure in your local area.
Setting – and publishing – a timeline for market exposure and offers lets buyers know that they will be able to get to the property and get their offers considered while still creating a sense of urgency.
5. Be ready to course correct. Is your home one of the houses that have been on the market for months without any action? Don't fret – there might still be hope. In real estate, there is something insiders call the Sweet Spot Phenomenon, where an overpriced home sits on the market for months with no bites, sometimes even through multiple price reductions. Finally, the seller lowers the price to the 'sweet spot,' and it generates multiple offers and sells for more than the final list price.
Yes – there are listings whose sellers net more than they expected because they were willing to revise the list price downward in response to market feedback (i.e., no showings, no offers, or lowball offers).
If your home has been lagging on the market, talk with your listing agent about what sort of price reduction strategy is likely to maximize your net sale price. Hint: many more buyers are attracted by chunky reductions or reductions below a common online search price range cutoff than by tiny, incremental reductions.
For example, you might draw more buyers, and ultimately more money, with a price reduction from $499,000 to $474,000 than with a series of small reductions from $499,000 to $479,000 because there is a set of buyers who may be cutting their search off at $475,000 so a price cut below that number will expose your home to a whole new group of prospects.