Pricing Low to Generate Multiple Offers
There is no doubt that overall buyer activity is picking up. It's quite impressive to see the levels of buyer activity we have right now given the past few years. Having said that, I'm seeing what appears to be a growing trend in pricing strategy.
Essentially, we are seeing properties priced artificially low to attract multiple offers. Once the initial offers are received, the listing Realtor will issue a Multiple Counter Offer asking for the buyers to provide a revised offer that is essentially their "highest and best offer."
Here is a couple of examples...
- A Realtor for a home in Tempe priced a home so low, they received 16 offers!
- Another Realtor for a home in Chandler has offers that pushed the price up from $119,000 list to $142,000, a 19% increase!
And it is no longer unusual at all to hear of properties for sale with at least 4 offers.
So, the difficulty for buyers is knowing what to do in that situation to win the deal for your clients. It is also difficult for those clients because they feel somewhat powerless to purchase the property when there are numerous offers submitted and they are competing heavily. In the recent past, many buyers would up and walk away rather than go through this process.
My concern and expectation is that buyers are going to have to rethink this approach and go ahead and submit an offer to win the property if possible. Buyers have to contemplate how badly they want the property and what they are really willing to pay. I say that because my concern is that the buyer demand is going to be more intense and that this will be a common occurrence in the future.
Now, as to how one approaches the Multiple Counter Offer situation to win is a challenging question. I have an approach I am taking with a couple of clients as well and will see how it performs to both be competitive but also protect my clients' money.
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