Ok so I’ve already discussed the surge of multiple offers this year… in fact I just talked about it two weeks ago. In just the last two weeks I’ve seen even more examples of multiple offers and they are now becoming the rule on properties priced well. In just the last 2 days I’ve had 2 clients in multiple offers (one in 4-way offer, other in 10-way offer) and both clients were outbid. Both clients wrote offers 5%-10% above asking price on houses in the upper $100′s and middle $200′s (details witheld for privacy) and came in with solid pre-approvals. One of the homes was a bank owned foreclosure, the other was a relocation property.
I was attending a sales meeting at Edina Realty Champlin this week and the loan officer asked how many agents had been in multiple offers in the last month. I believe almost every hand in the room went up… 25-30 agents in total. Compare this with last year when 1-2 hands might have come up. For homes in the under-$300k market that are well-priced, this feels like 2004 or 2005.
Now some may look at these remarks and say that most of the houses that are “well priced” are distressed sales and “don’t count.” Well you’re right and you’re wrong. In a market with substantial numbers of distressed sales these sales do impact the market around them and to think that they don’t is to stick your head in the sand. In the last 60 days I’ve been in multiple offers on scores of foreclosures but also had multiples on two relocating sellers and one estate seller. I know that there are occassionally multiple offers on “traditional seller” properties but many of these sellers are still holding out for prices they simply will not receive.
While the multiple offer phenomenon is largely focused on the foreclosure market, the fact that multiple offers exist at all in today’s market is a great sign. It says that the market has found price levels and financial conditions favorable enough to draw many bidders for each home. This will help put a floor in house prices in this category and lead to dramatic inventory reductions as these homes are snapped up quickly.
I now have multiple buyers that are becoming frustrated with the market because they’ve lost out on multiple offers over the last couple months. These experiences though will push them to become more decisive with their options (so that they write offers as soon as the homes are available) and will push them to either raise the price they’re willing to pay for a house or reduce their expectations of what they can get for the price they want. It’s funny how quickly this momentum has changed and it will be interesting to see how long this trend lasts.
