multiple offer

Showing a Home That’s Already Sold*

by Ross Kaplan on May 17, 2012

“Sold, Subject to Inspection”

I don’t do it that often, but today I showed clients a home that already sold.

With their knowledge and consent.

Why waste time showing a home that’s already spoken for?

Because this particular home — in East Edina and listed at $300k — sold in multiple offers after all of two days of market time.

“Pending” vs. “Sold”

Normally, only homes that have sold and actually closed establish prevailing prices, because the actual sales price isn’t known until closing.

However, when an affordable Edina home in good condition sells in multiples right away, it’s a pretty safe assumption that the Seller got their asking price (if not higher).

Because my client is looking for a similar home, they wanted to see what they can expect to pay (in truth, the next home similar to this one to come on the market is likely to sell for more, because the runners-up Buyers are likely to compete for it).

*Whether or not a home that’s under contract can still be shown is governed by the Inspection Contingency Addendum.

It’s quite common for the Seller to have that right until the Buyer has removed their Inspection Contingency.

In practice, however, other prospective Buyers typically decline to see a home once it’s flagged on MLS as “Sold, subject to inspection.”

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Housing Market Bellwethers (Good and Bad)

by Ross Kaplan on April 12, 2012

Is the Twin Cities housing market shifting gears?

Put it this way:  the public perception certainly has.  See, “Twin Cities Home Prices Up; Traditional Sales Strengthen.”

In fact, the market does feel different this spring.

The weekly Broker meetings — always a good litmus test of market trends — have devoted more time to dealing with multiple offers this Spring than they have in seven years (that would be 2005, if you need help with the math).

And active, local Buyers’ agents (that would include me) are reporting thin inventory and shifting leverage in multiple Twin Cities neighborhoods.

Turning Points

But what’s also nice is what’s missing.

Like, the unprompted offerings of sympathy (if not condolences) from complete strangers when they hear you are a Realtor.

That trend peaked (bottomed?) about 18 months ago.

Also missing:  the sketchy types who seem to invade the market — however briefly — at market extremes.  

Like shady auto dealer (and now convicted felon) Denny Hecker, who jumped into residential home sales and financing near the housing market peak.

Loudly.

There was a period back then when his ads seemed to be slapped on every bus bench and billboard in town.

See also, “Calling a Housing Market Bottom.”

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It Sold in Multiples — But Will it Appraise?

by Ross Kaplan on April 4, 2012

How does a listing agent who just sold their client’s home in multiple offers ensure that it appraises?

A.  Provide the Appraiser with helpful Comp’s (Comparable Sold Properties).
B. Email the Appraiser the runner-up offers (with identifying info expunged).
C.  Raise the listing price on MLS.
D. All of the above.

Correct answer:  D.

Of course, whether or not a given home appraises isn’t ultimately up to the listing agent.

So, a fallback strategy can be to pre-negotiate with the Buyer what happens if it doesn’t.

Not all Buyers will agree to this, but from the Seller’s perspective, the preferred approach is inserting a clause in the Purchase Agreement stating that if the home doesn’t appraise, the Buyer will put in additional cash to make up for any shortfall (leaving the sales price unchanged).  See, “In Buyer’s Sole Discretion.”

If the first Buyer doesn’t agree, it’s just possible that one of the “backup” Buyers will.

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Did it Sell TOO Fast?

by Ross Kaplan on March 19, 2012

“How Long Was the Home on the Market?” vs.
“How Much Exposure Did the Home Get?”

With multiple offers making a comeback in parts of the Twin Cities — I’ve been involved in three in just the last six weeks — it seems appropriate to ask, “Did that just-listed home sell TOO fast?”

It’s certainly possible, especially if the price was suspiciously low and the Buyer’s agent was — surprise, surprise — also the listing agent (called “single agent dual agency,” a classic conflict of interest in my opinion, and in the opinion of 17 states that forbade it).

However, the right question to ask isn’t, “how long was the home on the market?”

Rather, it’s “how much exposure did the home get?”

How Many Showings?

As I’ve written previously, the listing agent’s job isn’t ultimately about setting a price for a given home — the market takes care of that.

The agent’s job is to work with the owner to get their home in optimal condition; showcase the now-prepped home with flattering photos and marketing material(s); then expose the home to the broadest possible range of Buyers (and their agents) through a combination of networking, pre-list marketing, and open houses (Broker and Public).  See also, “Realtor Job Description.”

Bottom line:  testing the market isn’t ultimately about days on the market; it’s how much exposure the home got.

As a general proposition, I’d say that any home that had at least 15-20 showings — whether those occurred in two days or four months — was fully exposed to the market.

Once a home has had that many showings, whatever sales price the Seller and ultimate Buyer negotiate is presumptively ”market value.”

P.S.:  What about the home that has been for sale for four months and has had three showings (or none)?

That, too, arguably counts as market exposure — and nine times out of ten implicates price (way too high).

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One More on Multiple Offers . . .

March 9, 2012

What Should the Runners-Up Agents Say to the Listing Agent? Assuming that the listing agent (representing the Seller) conducted multiple offers openly, fairly, was communicative throughout, etc. — vs. selling the home to their own Buyer* at midnight for $20k less than the highest offer — what is appropriate for the runners-up agents to say [...]

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How Over-Aggressive Agents Hurt Their Buyers in Multiples

March 9, 2012

The Too-Zealous Realtor Don’t squeaky wheels get the grease? And in a hyper-competitive multiple offer situation, isn’t an aggressive agent an asset?  (nice alliteration, huh?) Yes . . . to a point. Beyond that point, hyper-aggressive behavior on the part of a Buyer’s agent can become a negative to the Seller (and their agent). Cause [...]

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Coffee (and Canoe?) for Sale

March 7, 2012

One of the highlights of my new listing at 5116 29th Ave. South in Minneapolis is the terrific location:  just two blocks to Lake Nokomis, 3 to Minnehaha Parkway, and close to light rail, the airport, and Highland Park. Even closer:  Nokomis Beach Coffee (pictured above), in between the home and the lake. Although it looks [...]

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Disclosing Multiple Offers: Pros & Cons

February 22, 2012

Identifying “Runners-Up” Buyers If you’ve been reading real estate blogs lately — this one and others — no doubt you’ve seen more discussion of multiple offers. That’s because, in a market with much lower inventory, we Realtors are seeing a lot more of them these days. In that vein, this post is about the pros and [...]

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