The deep sellers’ market continues to frustrate Silicon Valley home buyers, particularly in the lower price ranges and best areas. With scant inventory and sales, sometimes there’s very little to pick from, and many, many buyers all vying for the same property. A common question from Realtors and buyers alike to listing agents is this: “how many offers are you expecting?”
It can be hard to know. While some real estate agents advise their sellers to market the home with an unrealistically low price in an effort to obtain an avalanche of bids, most do not, but instead caution that it’s better to list on the lower end of the probable buyer’s value than the high end. If it’s a little low, the market will correct it (at least in a sellers’ market) but if it’s too high you may see no contracts on it at all.
Everyone wants to know how many purchase offers there will be on a listed home. In the MLS, I always mark a box requesting that agents who want to draft an offer contact me first. The reasons are many. First, I want to know how many bids there will be. Second, I want to make sure that they know that there are disclosures and inspections available. Another reason is to find out if they can follow instructions – this will help give me a sense of whether the agent is professional or sloppy, and provide a sense of whether it would be a good or bad experience to have him or her in escrow. Awhile back, I had a wonderful listing on the market in San Jose’s Blossom Valley area (zip 95136). The private agent comments say that offers will be on Thursday. And it gives agents the link to obtain disclosures. In the last 3 days I’ve had at least a half dozen agents call to tell me that they are writing an offer and want to send it over. They didn’t read the mls, they haven’t seen the disclosures. Their buyers are at a disadvantage – I shake my head and suspect that these guys would be terrible to work with! (Want to interchange with current listing?)
Most agents will call or email first, pull the disclosures and have some sort of dialogue with me before submitting an offer. The best agents will ask a few questions, such as whether the sellers need a rent back, if any property is excluded, and if there’s anything major they should know. Some, though, will neither email nor call, will not let me know that a contract is coming. Many times agents simply email or fax me an offer – and never call or email before or after to make sure it was received! They do their clients a tremendous disservice.
In general, though, a rule of thumb we’ve used for years is that for about every 2 disclosure packages given out, 1 offer will be submitted. When a home has a lot of issues, especially construction defects or need for repairs, the ratio will be lower. If the house is turnkey and the pricing isn’t too aggressive, the ratio will be higher. Sometimes we think that there will be 5 offers and we end up with 10. At others we think there will be 4 and there are none!
Lately, because of the intensely competitive nature of the market, there are more and more agents who wait until the last minute to submit an offer. If the deadline is noon, they will phone me at 11am to see how many offers there are, and I will get the contract an hour later. In some cases, the deadline is noon and the offers roll in at 2pm (if the agent doesn’t call and explain why it’s late, it will not bode well for the buyers). I am sometimes tempted to make a 7am deadline just to prevent this sort of thing from happening….
The market is tougher for buyers now than before, so if it looks like there will be 5 offers, assume that it will be 8 or 10. Above all, though, write an offer that you can live with whether you get the house or not.
For further reading:
5 things your Silicon Valley buyer’s agent can do to help improve the odds that your offer will be accepted
Preparing to buy your first home in Silicon Valley
Planning to sell your Silicon Valley home? Hire your Realtor before making any big decisions!
Hiring an Agent to Help You Sell or Buy a Home in Silicon Valley
Why didn’t my San Jose home sell?
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