The deep sellers’ market continues to frustrate Silicon Valley home buyers. 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?”
In short:
- when showings change from 30 minute windows to 15 or 20 minute viewing times, you know that there’s a lot of interest
- online, look to see if Redfin calls it a “hot home” – those are more likely to attract multiple offers (also, watch the Redfin price estimate, it changes with its website traffic)
- the ratio of disclosure packages out to offers written is about 1 in 3 for most homes (a near perfect house will have a higher ratio – perhaps 50% or a little more, a home with issues will have a lower ratio)
- it’s not an exact science – some buyers will drop out even after writing an offer, and some buyers will swoop in at the last minute
- the overbids are often proportional to the number of contracts received, but not always (an old rule of thumb is 1% per offer)
- listing agents may play down the number of offers expected since they don’t want to discourage anyone from writing
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.
How many offers? Communication is key
Everyone wants to know how many 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, before writing. 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. Selling is hard enough – I don’t want a buyer’s agent causing my sellers any unnecessary stress.
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 before the offers were due, I 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!
Most agents will call or email first, pull the disclosures and have some sort of dialogue with me before submitting an offer. The best buyer’s agents will communicate, 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. They show interest and professionalism. Some, though, will neither email nor call, will not let me know that a contract is coming. Many times agents simply email me an offer – and never call, text, or email before or after to make sure it was received! They do their clients a tremendous disservice.
Something to be aware of is that not all listing agents will provide a true and honest picture of how many offers they expect. Some of them will intentionally downplay the interest so that buyers aren’t scared away. They are supposed to be fair and honest to all parties, of course. That is a duty. But while advocating for their clients to get the most offers possible, they may forget the duty of providing fair and honest communication. When I ask how many offers are expected, I always ask how many disclosure packages have gone out. If it’s a good home, I assume at least 1/3 of those will become an offer.
Recently I heard of a home getting a little over 50% of the disclosure packages turning into offers. That was quite high and it was not a perfect house.
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:
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?
There are more than 30 articles on this site relating to multiple offers. Find all of them here:
https://sanjoserealestatelosgatoshomes.com/category/buying-tips/multiple-offers-buying-tips/
