What Should You Offer?
This post is for all the Buyers out there. The Vancouver Real Estate Market is hard to navigate. The market is showing some signs of slowing down, though great properties are still getting multiple offers and are selling quickly.
One of the most frequent questions I get from my Buyers surrounds making an offer on a house, and is the hardest one to answer is… What should I offer?
This question can apply anytime you’re making an offer on a property, whether or not it’s a multiple offer situation. There’s no one right answer as every offer is situational, but I’ll discuss both scenarios.
What to Offer in a Multiple Offer Situation?
First, multiple offer situations have been common in the Vancouver Real Estate Market for a year and a half now. A multiple offer situation is when one property receives offers from multiple Buyers at the same time, giving the negotiation power to the Seller. Thanks to these multiple offers, Buyers have to fight each other for the chance to have their offer accepted. This means Buyers need to submit strong offers, with terms and dates favourable to the Seller. This means offers need to be high in price and subject free (which means once the Seller accepts the offer it’s a done deal), the dates need to work for the Seller, and the terms need to be favourable for the Seller (for example, letting the Seller take fixtures).
Now, what should you offer if the property you love expects to receive more than one offer? Use the following questions, and their answer, as a guide:
- How is the property priced? Looks at recent sales in the building, and the neighbourhood. Is it much lower than market value? Is it already priced higher than market value?
- How many offers are they expecting? It’s a lot easier to negotiate when you’re competing with one other offer than it is to compete with 5 or more offers.
- Is the Seller going to take the best offer as they come in, or will they give Buyers a chance to make their offer better upon review of all offers?
- Has any other Buyer done an inspection? That’s usually an indication that the Buyer is attempting to come in subject free.
- Are you coming in with a subject free offer, or will you have subject clauses (i.e. subject to financing or inspection)? When reviewing offers, a Seller *should* always give Buyers with a subject free offer a chance to increase their price if the highest price was an offer with subjects (and thus, “risky”). This means, that with a subject free offer, you might have a chance to come in with a slightly lower than necessary price with the chance to increase it as necessary.
- Compare this unit to other units that you’ve liked in the past.. what happened during those multiple offer situations?
- How much do you love the property? What is it worth to you?
- Does your real estate agent know the Seller’s real estate agent? Relationships matter, and it can make a difference in knowing where you stand when the offers are reviewed.
At the end of the day, once Buyers are offering over the list price on a property, and potentially over the market value of the property, what they offer becomes emotional rather than logical. That’s why you hear of some nutty prices when the final sale price is released… they can never be predicted, so you have to come in with a strong offer that you’re comfortable with, and remember, you just about always have to have the highest price in order to “win” a multiple offer situation.
What to Offer if it Isn’t a Multiple Offer Situation
When you love a property that isn’t going to receive more than one offer, you have a lot more negotiation room with the Seller. Of course, the Seller will still have certain hopes for their sale, but it becomes a little more of a give and take situation.
Along with most of the questions above, you will also want to know: Why are they selling?
If they’ve received other offers in the past, and why they either weren’t accepted or fell apart? How soon can they respond to your offer?
Given that the market is still quite busy, most Sellers will still be quite confident in their price and chances of selling their unit even if they don’t receive any offers after the first weekend of open houses. Start with a reasonable offer and plan to negotiate the details.
At the end of the day, offers situations need finesse, contract knowledge, and expert advice to navigate properly.
You want to make sure that you are working with a realtor who works in your best interest (rather than in the Seller’s best interest) so contact the We Love East Van team today to chat about what you’re looking for and let us know if you have any questions.