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#1 rambaldi

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Posted 15 March 2016 - 07:25 PM

I've always wondered what really happens after a REALTOR specifies a cut-off time for offers and multiple offers come in, particularly in today's apparently scorching hot market, where 10+ offers are supposedly more common than in years past. How transparent is the process to all offerors? How does the counter-bidding process work? Do all offerors have a chance to stay in the game? How much time is given to put in a new offer? Does it turn into an auction?, etc. 

 

Thanks.


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#2 lanforod

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Posted 15 March 2016 - 07:31 PM

^ I was wondering how a pure auction could work for a house in today's market...



#3 MarkoJ

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Posted 15 March 2016 - 10:34 PM

I've always wondered what really happens after a REALTOR specifies a cut-off time for offers and multiple offers come in, particularly in today's apparently scorching hot market, where 10+ offers are supposedly more common than in years past. How transparent is the process to all offerors? How does the counter-bidding process work? Do all offerors have a chance to stay in the game? How much time is given to put in a new offer? Does it turn into an auction?, etc. 

 

Thanks.

 

This is how things works for the most part....

 

i/ Property is listed on a Thursday, open house Saturday/Sunday and offers to be presented at 6 pm Sunday or Monday, for example.

ii/  Offers are typically emailed to listing REATLOR® before that time and listing REALTOR® presents all the offers to the seller.  Sometimes the buyer's REALTOR® presents his or her offer at the seller's home with a picture of the young family that is making an offer....emotional appeal only works if the offer is the best offer :)

iii/ In theory everyone submitting offers should be aware of how many other offers there are; in reality offers are not being sent in until 5:55 pm for example.  I am finding the market right now is so crazy that there are TYPICALLY more offers when it is all said and done than was anticipated.  So no, it isn't completely transperent because you could call listing REALTOR®at 5:50 and she has 4 offers, you send in yours, but by 6 pm she has 8 offers and a 9th REATLOR is presenting his or her in person.  Often things are so crazy listing REALTOR® simply does not have time to call everyone back as each additional offer comes in last minute especially when you get into 10+ offers (yes, there are properties with 10+ offers).

iv/ Typically when you have 5+ offers (usually over asking) seller does not engage in counter-offer negotiations.  The best offer is accepted as is I would say 90% of the time; therefore, as a buyer you need to put your best foot forward right away as you probably will not get a counter offer.  For example, if asking price is $749,000 and seller has offers of $775,000 - $800,000 and $851,000 seller will just take the $851,000.  They are typically not going to call back the $775,000 or $800,000 asking $860,000.

 

It is not an auction!

 

This is a great personal example.  Earlier this year my clients offered on an expensive property $50,000 below asking.  There was a competing offer (only one competing offer) and that party offered well over $100,000 above asking.  If it wasn't for my clients below ask offer the other party could have bought the house for asking price; however, they incorrectly assumed my clients offer was above asking.

 

Personal advice: Don't try to outbid everyone blindly because you will get fried playing the guessing game. 

 

On a side note a LOT of buyers are making unconditional offers right now so if you have subject to financing/inspection, etc. and there is 5 plus offers and 3 plus are unconditional your conditional offer is going into the trash bucket right off the bat.

 

I do not like unconditional offers (I am very pro inspections, oil tank scans, video camera inspection of drain tiles, etc.) but reality is often right now buyer has no chance with a conditional offer.


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#4 lanforod

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Posted 16 March 2016 - 11:06 AM

Unconditional even regarding inspections? That's nuts!

 

 

^ that process sounds about right. How many offers there are could be solved by technology if you really wanted to.

 

Can real estate be sold at a live auction in BC (not repossessions)? In a market like today, wouldn't that generate the best offers for sellers if they could do it by auction (not withstanding your dual offer scenario, Marko).



#5 LeoVictoria

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Posted 16 March 2016 - 11:34 AM

 

I do not like unconditional offers (I am very pro inspections, oil tank scans, video camera inspection of drain tiles, etc.) but reality is often right now buyer has no chance with a conditional offer.

 

Do you see people getting an inspector in before making an offer so that they can make their offer unconditional?



#6 MarkoJ

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Posted 16 March 2016 - 12:00 PM

Unconditional even regarding inspections? That's nuts!

 

 

^ that process sounds about right. How many offers there are could be solved by technology if you really wanted to.

 

Can real estate be sold at a live auction in BC (not repossessions)? In a market like today, wouldn't that generate the best offers for sellers if they could do it by auction (not withstanding your dual offer scenario, Marko).

 

I am not convinced an auction would generate the best price?  Usually the top blind offer is well in excess of the second offer as people submit offers on emotion.

 

Sometimes you have 5 offers - 750k, 770k, 780k, 785k and the one emotional "I NEED TO HAVE THIS HOUSE AT ALL COST" of 901k.

 

Real estate isn't a Ritchie Bros auction of heavy machinery.....residential real estate is heavily fuelled by emotion.


Marko Juras, REALTOR® & Associate Broker | Gold MLS® 2011-2018 | Fair Realty

www.MarkoJuras.com - MLS® from $899 and $1,000 cash back for buyers | www.834sales.com & www.promontoryforsale.com - Building(s) specialist 

Looking at Condo Pre-Sales in Victoria? Save Thousands!

 

 


#7 nagel

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Posted 16 March 2016 - 12:06 PM

So what's the reasoning behind not having a realtor call back the other lower offers to try and squeeze them higher? Besides possibly not being worth it to them personally. I get that 3% on 5K is not a big help to the realtor but that 5K can sure help the seller.

#8 MarkoJ

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Posted 16 March 2016 - 12:06 PM

Do you see people getting an inspector in before making an offer so that they can make their offer unconditional?

 

Sometimes but not that often.  The percentage of unconditional offers out there right now is just insane.  It has to be over 40% on a SFH in the core.   To put things into perspective, in the first 5 years of my career (over 300 transactions during that time) I never wrote up an unconditional offer.  That being said I am conservative and encourage my clients to do due diligence but still.  This year I've written quite a few and many have been unsuccessful (outbid by other unconditional offers).

 

2010-2015 there was so much discussion about vermiculite (asbestos containing insulation approx. $10k to remove from attic), Poly B plumbing, aluminum wiring, etc....very long list on older homes.

 

I haven't heard the word vermiculite in the last few months.  No one seems to give a sh1t anymore but why would they care about a 10k expense when people are every single day going in 100k-200k over asking.


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www.MarkoJuras.com - MLS® from $899 and $1,000 cash back for buyers | www.834sales.com & www.promontoryforsale.com - Building(s) specialist 

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#9 MarkoJ

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Posted 16 March 2016 - 12:10 PM

So what's the reasoning behind not having a realtor call back the other lower offers to try and squeeze them higher? Besides possibly not being worth it to them personally. I get that 3% on 5K is not a big help to the realtor but that 5K can sure help the seller.

 

Several reasons.

 

- Everyone knows it is a bidding war; therefore, you assume that the buyer is putting their best foot forward and you can't squeeze much out of them.

 

- If there are 10 offers realistically you can't keep calling everyone asking them to come up because at that point you need to give everyone an opportunity to keep revising their offer.  If 9 offers revise you need to call the best offer to give them a chance, what if they go up? Do you call the other 9 again?

 

- Timelines, if offers are being submitted at 6 pm usually you only leave the offer open until 7 pm for acceptance.

 

It is pretty simple, you know you are in a bidding war so just write up what you feel most comfortable and let the chips fall.


Edited by MarkoJ, 16 March 2016 - 12:16 PM.

Marko Juras, REALTOR® & Associate Broker | Gold MLS® 2011-2018 | Fair Realty

www.MarkoJuras.com - MLS® from $899 and $1,000 cash back for buyers | www.834sales.com & www.promontoryforsale.com - Building(s) specialist 

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#10 MarkoJ

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Posted 16 March 2016 - 12:13 PM

Also, quite often you have a clear cut winner.  Let's say you have 6 offers.

 

- 3 have conditions so you garbage those right away.

- 3 are unconditional, but one can only make a 6 month completion date work and you need 3 months, throw that one out.

- 2 offers left on table and one is 800k and one is 875k....you go with 875k.  Odds are 800k is not coming up to 875k.  No point in calling back the conditional ones as the odds of someone agreeing to go unconditional when they've written up conditional is extremely extremely slim (not worth calling).


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Marko Juras, REALTOR® & Associate Broker | Gold MLS® 2011-2018 | Fair Realty

www.MarkoJuras.com - MLS® from $899 and $1,000 cash back for buyers | www.834sales.com & www.promontoryforsale.com - Building(s) specialist 

Looking at Condo Pre-Sales in Victoria? Save Thousands!

 

 


#11 dasmo

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Posted 16 March 2016 - 12:43 PM

Isn't it an auction just a blind auction? 



#12 MarkoJ

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Posted 16 March 2016 - 02:49 PM

Isn't it an auction just a blind auction? 

 

I guess you could look at it that way.  To me an auction is like Barrett Jackson car auction type style.


Marko Juras, REALTOR® & Associate Broker | Gold MLS® 2011-2018 | Fair Realty

www.MarkoJuras.com - MLS® from $899 and $1,000 cash back for buyers | www.834sales.com & www.promontoryforsale.com - Building(s) specialist 

Looking at Condo Pre-Sales in Victoria? Save Thousands!

 

 


#13 rambaldi

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Posted 16 March 2016 - 05:03 PM

Thanks Marko. I really appreciate your explanations!



#14 LJ

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Posted 16 March 2016 - 07:56 PM

^ I was wondering how a pure auction could work for a house in today's market...

There were auctions for houses in Vancouver back in the eighties. You may not get the highest price but it sells/closes on the day of the auction.


Life's a journey......so roll down the window and enjoy the breeze.

#15 rambaldi

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Posted 22 June 2016 - 09:23 PM

 

ii/  Offers are typically emailed to listing REATLOR® before that time and listing REALTOR® presents all the offers to the seller.  Sometimes the buyer's REALTOR® presents his or her offer at the seller's home with a picture of the young family that is making an offer....emotional appeal only works if the offer is the best offer :)

iii/ In theory everyone submitting offers should be aware of how many other offers there are; in reality offers are not being sent in until 5:55 pm for example.  

 

Thanks Marko.

Can the listing REALTOR see the offers before the deadline or are they somehow sealed?

I'm thinking that if a REALTOR already has offer(s) in hand, at say 2pm, and is accepting offers until 6pm, it would be pretty tempting to sneak a peek at those offers and hint to any other offerors of the highest price received so far...



#16 MarkoJ

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Posted 23 June 2016 - 12:46 AM

Thanks Marko.

Can the listing REALTOR see the offers before the deadline or are they somehow sealed?

I'm thinking that if a REALTOR already has offer(s) in hand, at say 2pm, and is accepting offers until 6pm, it would be pretty tempting to sneak a peek at those offers and hint to any other offerors of the highest price received so far...

 

He or she typically can unless they advise that all offers be delivered sealed.

 

Most realtors representing buyers hold the offers to the last minute.  There was a situation a few months ago where at 4:33 pm the realtor had 3 offers and at the deadline (5 pm) they had 14 offers.  So 11 came in between 4:33 and 5:00 pm.


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Marko Juras, REALTOR® & Associate Broker | Gold MLS® 2011-2018 | Fair Realty

www.MarkoJuras.com - MLS® from $899 and $1,000 cash back for buyers | www.834sales.com & www.promontoryforsale.com - Building(s) specialist 

Looking at Condo Pre-Sales in Victoria? Save Thousands!

 

 


 



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