Right now, the Vancouver Real Estate Market is BUSY! This activity, paired with low inventory, has lead to any good properties receiving multiple offers. Multiple Offers on properties for sale in Vancouver happen when the market is really busy (enough that inventory doesn’t meet demand) or when a listing agent strategically lists a property far under its value. Here’s what you need to know.
A Multiple Offer Situation is when a Seller receives multiple offers at one time, giving the Seller the chance to compare offers and force Buyers to submit their best offer so as to not lose the opportunity to purchase the property to someone else. When the market is really busy, the Listing Agent typically sets a specific day and time after the weekend Open House to review any/all offers that are submitted beforehand. This gives Buyers a chance to do some due diligence prior to submitting their offer in order to submit their best possible offer.
The Listing Agent is obligated to let every interested Buyer know that an offer has been received. This allows Buyers to submit their best offer (i.e. highest price they’re willing to pay and with the cleanest possible contract). The listing agent does not have to tell us how many offers have been received, just that there is at least one other. When a Seller has multiple offers on the table, they will go through every offer and either accept one, deny them all, or go back to some/all Buyers and ask for an improved offer. The Listing Agent doesn’t tell Buyers/Buyers Agents the value of the other offers, but they can say if there are higher offers. Eventually, the best offer (in the Seller’s eyes) becomes the winning bid.
The question for the Buyer then becomes, how much do you want the property?
Navigating Multiple Offer Scenarios
How to navigate multiple offers is affected by the number of other offers on the table – its a lot easier to compete with a few offers than it is to compete with 8+ offers.
There are a few things to consider when you’re in a multiple offer scenario as a Buyer:
- Depending on how the property is priced, and how many other Buyers are interested, you often have to offer higher than the asking price, sometimes to an uncomfortable amount (think about it, if you’re comfortable with the value of the property, there’s a good chance another Buyer you’re competing with is thinking the same thing).
- Usually, Buyers have to accept the Seller’s ideal completion and possession dates (Sellers are in control, so why would they accept dates that don’t work for them?).
- Buyers also have to limit or forgo subject clauses to make their offer as firm as possible. If you submit a “subject free” offer and the Seller accepts your offer, then it’s a done deal! An offer with a subject clause allows the Buyer to walk away from the contract if they don’t like what they discover. This is why all Sellers prefer firm, subject free offers. If you have to have subject clauses in your contract, try to make the “subject removal” timeline as quick as possible.
- Many people will remove their financing clause if they are certain their mortgage will be approved (only do this if you are certain and are working with a fantastic mortgage broker who can explain any potential ramifications which could include not being approved for mortgage financing and then being sued by the Seller). Know your ceiling price before you jump into Multiple Offers (and any other offer for that matter). Emotions are high during negotiations, so knowing your ceiling price will help prevent you from going over your budget in order to “win”.
- Many Buyers try to have the inspection done before submitting their offer so that they know the condition of the property before they write their offer.
- Buyers can also go through all property documentation and questions prior to submitting an offer. This means ensuring that you’ve done your due diligence on all pertinent questions prior to submitting an offer.
- Many people increase their deposit amount to strengthen their offer.
- Finally, you can write a letter to the Seller is you want to play the emotional card.
These situations are often really nerve-wrecking and emotional, so make sure you’re available and ready to make some decisions when the Seller is reviewing offers, in case they want to negotiate a detail on your offer.
Tips to Win when there are Multiple Offers
I can give you a plethora of reasons as to why you should work with a real estate agent when you’re looking for a new home, but a competitive Vancouver real estate market is a big reason. It seems every week I’m involved in a multiple offer situation on behalf of one of my Buyers. Many Sellers are instructing Buyers that they will be looking at offers on the Sunday, Monday or Tuesday night after the first weekend of open houses, giving every Buyer who was interested in the property a chance to prepare their offer in what is likely to be a multiple offer situation.
Having the winning bid in a multiple offer situation comes down to more than just price – the dates, terms of the contracts, subject clauses, relationship with the listing agent, seller’s motivation and fine tuned negotiation techniques come into play to put certain Buyers ahead. With proper preparation and mental toughness, a multiple offer situation doesn’t necessarily need to end in the Buyer paying more than they initially wanted too. I’ve been involved in a multiple offer situation where every Buyer offered under the list price because the property was priced too high given recent and comparable sales.
If you’re looking to buy, and your ideal home hits the market and expects multiple offers, you will have a hard time being successful in the multiple offer situation unless you already have a realtor – working in your best interest – instructing you as to what you need to do before the offer and during the offer presentation. I tell everyone that you need to come in with your strongest and best offer. What does that mean exactly?
Here’s an example..
A Multiple Offer Example
I was helping a great client of mine look for a 2 bedroom, 2 bathroom listing for under $900,000 in Fairview. Sounds do-able right? Well it’s what just about everyone else is looking for now too, and when a great new listing hit the market, we sprung into action. The open house was busy, the listing agent had well over 50 groups come through, instructing everyone that they would be looking at offers on Tuesday. Thankfully I already had a pre-existing relationship with this listing agent, and what I believe to be a mutual respect for each of us being top agents. Ask good questions, listen to the listing agent and be courteous to the other people at the open house (TIP 1 – be courteous, prepared and educated to develop trust with the Listing Agent).
After the Open House I had the agent send me all of the strata documents, and took the weekend to go through those documents with my Buyer, addressing potential issues, getting the answers to our questions and ensuring my Buyer knew what they was buying. We booked an inspection for Monday morning, the morning before the offers would be presented, so that my Buyer could take into account any issues with the home before the offer and show the Seller that we are comfortable purchasing the property after a more thorough evaluation. I also had my Buyer work with their Mortgage Broker to ensure that this property, up to a certain price, would be do-able from a financial standpoint. Thankfully, this hard work before the offer insured that we could submit a “subject free” offer, meaning that once the Seller accepts the offer, the deal would be done. I also had my Buyer get a bank draft for the deposit before the offer presentation so the Seller wouldn’t have to wait for the final piece of the puzzle (TIP 2 – Do everything needed to submit a subject free offer, including pulling a bank draft for the deposit). There were two other Buyers who did home inspections before the offer presentation. That’s a pretty good indication that they will be coming in with a very strong offer themselves.
Note: Even if you can’t remove the financing clause prior to the offer presentation, it’s not necessarily a deal breaker since not everyone has that level of financial certainty. In the past, I’ve had my client’s Mortgage Broker write a letter indicating that the Buyer is a good candidate and shouldn’t run into any problems with financing. Your Mortgage Broker will be able to guide you here. Reducing the number of days your mortgage broker needs to secure your approval can help too.
This property in particular was a little hard to place value on. The unit was listed for $820,000, which was a very good price – priced lower than it should have been given the comparable sales, the quality of the building and the clean condition. I told my Buyer that we would have to go in with an offer price above the asking price, but it was tough to nail down a good valuation that would still catch the Seller’s attention. We looked through comparables and came up with a strong offer price of $870,000 – yes it was $50,000 over asking but it was still well within the unit’s value compared to recent sales. (TIP 3 – Come in with your best offer price). Keep in mind that the Seller doesn’t necessarily give Buyers a second chance to increase their offer, so if you don’t come in with your highest price right away, you might lose out to another Buyer who came in strong initially.
The Seller had an interesting situation – they was moving into a brand new development, and as we know with new developments, there is often an uncertain move in date. In this case, the developers expected the move in date to be at the end of April, but in reality that date could be pushed back to some time in June. The Listing Agent had asked that all Buyers give the Seller either a flexible move in date, or an early completion with a promise that the Seller can rent the unit back until they are allowed to move into their new place. We decided to give the Seller the flexible Completion Date (by giving the Seller the right to extend the move in date with some notice to us). We gave the Seller the option to do this anytime between mid April and the end of June (TIP 4 – Use the Seller’s Ideal Dates).
When presenting the offer, negotiation tactics come in, both in what I say and the information I provide. Presenting my Buyer as a strong candidate who loves the property is important, but tugging at the Seller’s heart strings can also help in this situation. If my Buyer is truly head over heels for the property, writing a personal letter to the Seller can help sway them in your favour, especially if the Seller’s get two very similar offers (TIP 5 – Play the emotional card and and tug at the Seller’s heartstrings).
In this situation in particular, the listing agent was going to be presenting offers to the Seller at 7pm, so I should hear something – whether the Seller accepts, denies or counters my offer – soon after. The listing agent received nine offers, so it would take some time to go through every one. Of course, there were a handful of offers that just weren’t good – full subjects, weeklong subject removal period (which is uncertainty for the Seller) not ideal dates, etc. There were only a few offers that were worth considering.
After an hour I followed with with the listing agent and he said he will know more in 15 minutes. Darn! That means they’re likely working with another offer. About 15 minutes later I get a call from the Listing Agent – the other Buyers did not accept the Seller’s counter offer, so the Seller accepted my Buyer’s offer!! Thankfully the Seller didn’t come back to us to ask for more money (which happens often) but rather thanked us for our strong offer and accepted it without ruffling any feathers.
What happened was another group had submitted an offer with a higher price than ours, but they wanted to do a home inspection (they hadn’t done one prior to the offer presentation). The Seller’s went back to that Buyer and asked if they would be willing to remove the home inspection clause to make this a firm deal (with the reasoning that three other Buyers had a home inspection and came in with similarly strong offers, so it must’ve went well). Those Buyers said no, they wanted to keep the home inspection (if only they had done it beforehand..). In lieu of more money for an uncertain sale, the Sellers decided to accept our firm offer!
Multiple Offers are always a whirlwind of emotions but ensuring that you’re educated and well prepared can make all the difference. If that’s not a reason to work with a real estate agent, I don’t know what is.
Contact me at kristi@realestatevancity.ca or 778-387-7371 if you’d like to chat further about your options and how to navigate this busy market.