Multiple offers submitted: is the real estate market turning?
Serious market watchers will all have their own theories on milestones that signal a change in the fortunes of the real estate market. But here’s an interesting fact: in 4 of our past 5 sales we’ve had multiple offers submitted (i.e. offers from more than one buyer at the same time).
A rush of market excitement? A boom about to happen? As much as we’d love to be the ones to call the start of a new spike in Brisbane home prices our view is the reasons for this strong buyer reaction are not that simple. Here’s some theories:
1. Home buyers are nervous of submitting offers. Most tell us that they feel that prices have flattened and there’s unlikely to be any further price drops of any size. But they can’t help be tempted to wait just in case their chosen home is further reduced in price. They’re also hearing ‘war stories’ from friends who’ve hunted down a bargain, and some fear the social stigma of being seen as paying too much!
2. Low offers are rare. There’s definitely some cultural issues at play here, but few home buyers will give you an offer of $500,000 on an asking price of $550,000 – even if the property is worth every cent of $500,000. Home sellers are often frustrated that they “didn’t even get an offer”. But buyers are reluctant to invest themselves emotionally (or spend their time) on a home that’s not realistically priced. If that home’s listed too high they’ll simply move on to the next one. Of all the trends we’ve noticed in recent months this is one of the strongest. Over the past 12 months in our agency the agreed contract prices have averaged just 2.7% less than the asking prices.
3. Once they know another offer’s been submitted, 1. and 2. above become much less of a concern for buyers. There’s some wonderful safety in numbers and home buyers are often quickly primed to act when they see another buyer take that step.
And of course those multiple offers are a great opportunity to maximise a sale price for a home seller. They’re arguably better than an auction, where buyers only have to bid $500 or $1000 more than the next person. When we receive multiple offers we make each party aware of the other but not the details, which are confidential to the parties involved. Each buyer is asked to submit their best offer and this is exactly what it achieves – the highest price and on the best terms that each buyers is prepared to submit. Not just a smidgeon higher than the next bidder.
Sellers shouldn’t fear reducing their asking price. This can open up strong market response and often lead to better results than you might expect. Even in this “buyers’ market” home buyers will compete for a property they want. Your agent should be trained in helping this to happen.
And if you’re looking to buy right now? You’d do well to move quickly when you see a place you like and submit an offer, regardless of the asking price.