How REALTORS® prepare buyers for the realities of today’s multiple-offer markets
By Marcie Geffner
Three. Eight. 20. 30. 62. Would you believe 73? That’s how many offers some sellers in newly hot housing markets reportedly have received for their homes. * With so many offers on the table, it’s clear that competition for hot listings is indeed the new norm in some of California’s badly battered housing markets. That means many buyers inevitably will be disappointed, and the challenge then for REALTORS® is to convince those buyers not to give up their home-buying plans and flee the market.
Buyers Must Be Properly Prepped
The most effective strategy in such situations is to manage buyers’ expectations before they make an offer, says Jim Swanson, a broker-associate with Prudential California Realty in Sacramento. Virtually all of the prime new-on-the-market homes in that area attract multiple offers, Swanson estimates.
“If you did your job, it’s not a problem: They’ll be sanguine, and they’ll say it wasn’t the right house,” he explains. “If they’re crestfallen, then you failed before the offer was written.”
Swanson advises buyers to offer the highest price they’re willing to pay for a particular home. That way, if their offer isn’t accepted, they can take comfort in the knowledge that they wouldn’t have wanted to pay more and that, in their opinion, another buyer paid “too much” for that house.
Rodney D. Gallman, a REALTOR® with Altera Real Estate Mel Wilson & Associates in Northridge, also educates buyers upfront about the realities of multiple-offer markets. He says he explains that the process can be timeconsuming and that if a seller doesn’t choose their offer, they’ll need to look at more properties.
“Buyers always want to offer a little less and get a good deal,” he observes. “You have to let them know that there are multiple offers and if they don’t put their best price forward, chances are we won’t get this one.”
Gallman estimates that threequarters of the homes for sale—non-REO properties for sale by individual home sellers—in his area have attracted multiple offers.
“I have five listings in the Antelope Valley,” he says, “and I probably have three offers on each of them.”
Buyers Take Cue From Agent’s Enthusiasm
Connie Vaughn, a REALTOR® with ZipRealty in West Covina, advises buyers to make multiple offers of their own to improve their odds of an offer being accepted. She says most of the homes in her area receive multiple offers, and some have netted as many as 30 or more offers.
If none of the offers is successful, Vaughn says, she tries to encourage buyers “to keep looking and not give up. Sometimes, it gets frustrating, but you have to keep positive and say, ‘We are going to do our best, and we will succeed,’” she says. “I assure them that I am determined to get them into a house.”
Gallman agrees that the agent’s positivity is an important ingredient in the mix of factors that determine whether frustrated buyers become discouraged or soldier on until they achieve their goal.
“The personality of the agent—the energy he provides—dictates whether buyers can keep moving forward,” he says. “If you let them see that you aren’t excited, then they aren’t going to be excited either.”
Of course, it’s not always easy for REALTORS® to keep up that positive attitude in the face of their own disappointment along with the buyer’s frustration.
“This business is not for the weak at heart,” Gallman observes. “Multiple offers can be really frustrating.”
Yet again, the agent’s attitude is crucial to overcome such personal challenges.
“Sometimes it does get frustrating,” Vaughn agrees. “You have to keep positive and say, ‘We are going to do our best, and we will succeed.’ And you have to believe that it will work!”
Credit Scores Take Hits?
A new trend in multiple-offer markets is that some sellers require buyers to obtain a mortgage preapproval from a specific lender. This trend has forced buyers to apply for a loan with multiple lenders, and that has triggered more hard inquiries on those buyers’ credit reports.
Some buyers are concerned that these multiple applications will hurt their credit score, according to Jim Swanson, a broker-associate with Prudential California Realty in Sacramento.
“They are told by the first lender they talk to, ‘Oh, by the way, don’t consult another lender because it will affect your credit,’” he says.
Whether those inquiries will hurt the buyer’s credit score is difficult to say since that depends not only on the number of inquiries, but also the timing of those inquiries and other aspects of the individual’s credit history, according to MyFICO.com, a Web site operated by Fair Isaac in San Rafael.
Credit scores generally group together multiple inquiries for the same type of new loan over a short time period to allow for rate shopping. However, the duration of that time period varies among different credit scores, according to Cynthia Baker, a spokesperson for the Experian credit bureau.
The current FICO score uses rolling 30-day and 45-day “buffers” to group related inquiries, but older generations of the score still in use may have shorter inquiry-grouping buffers, according to Craig Watts, a spokesperson for Fair Isaac.
“REALTORS® are unlikely to run into a problem unless the buyer takes six months to make offer after offer and keeps getting declined. Our advice to consumers is to do their shopping in a reasonable period of time,” Watts says.
That advice may make the need to present a strong offer all the more urgent.
Marcie Geffner is a freelance writer in Los Angeles and former senior editor of California Real Estate magazine.
