As we move closer to spring of 2016, it has become evident that the housing market in Waterloo Region is continuing to evolve and heat up. With a less than adequate supply of new listings and an abundance of buyers, multiple offers are becoming more common, especially for homes that appeal to first time buyers.
Depending on the price range, location, and some other factors, multiple offer scenarios typically result in a higher sale price for the seller, and at least one or more disappointed home buyers. As a Realtor©, it is my duty to educate Home Buyers on what they can expect when entering into a Multiple Offer situation.
Having a detailed discussion with the home buyer is an important part of the education process, along with reviewing the current market trends and setting realistic expectations for them. More often than not, the perceptions that many people have of how a multiple offer is handled, is often much different from how things are actually done, so helping clients understand the process is key to providing them with good service and increasing their chances of a successful outcome.
For home buyers, determining their offer price in a multiple offer scenario can be a daunting challenge. Nobody likes to pay full price, and just about everyone wants a deal. With that in mind, the “Sale Price to Listing Price Ratio” for Kitchener-Waterloo in January of 2016 was 98.5%. This ratio represents houses that were sold when multiple offers were present and also for when there was only one Offer. Needless to say, when multiple offers arise, sale prices are almost always at the asking price or above. It’s important for home buyers to understand this so that they can determine how to best respond when there are competing offers.
In some markets, it is not uncommon for home buyers to waive conditions for financing and home inspection in order to make their offer more appealing and increase the likelihood of success in a multiple offer situation—these are often the devastated people you see on TV shows that have purchased a home (without a home inspection) and find out shortly after they move in that there are serious problems with the home. For home buyers, it is important to recognize the importance of conducting their due diligence and fully understanding the risks involved in excluding certain conditions in their offer.
There are some different options available for buyers navigating in a hot market. Awhile ago, I had a listing that was in a desirable area of town and was beautiful from top to bottom. There was a great deal of interest in the home and many buyers showed up the day it was listed. It sold for asking price the very same day.
The Buyers had lost out many times before and decided that this time they would have a home inspector (or two) available on a moment’s notice to conduct a brief inspection of the home. Once the buyers visited the home and decided to move forward with an offer, their agent asked us if they could have 60-90 minutes that afternoon to have the home inspector check out the major components of the home (roof, attic, foundation, heating/cooling system, etc). By the time evening came, the Buyers had submitted a full-price offer with no conditions. A successful, low-risk approach that worked.
If you have questions about multiple offers or buying in a hot market, please feel free to call us anytime to learn more.
You can reach us at 519-807-0979.