If you are trying to buy a property in the Greater Boston Area, you know full well that demand is exceeding supply. With the economy strengthening, companies moving into the area, academia expanding and mortgage rates still very low buyers are out in great numbers. Winter properties for sale were limited by our historic snowfall this winter which kept the market shut down. Everything is now packed into our current spring market, resulting in multiple offer situations on many homes. Multiple offers are not a new phenomenon in this area, but there seem to be a couple of new twists to the plot.
The Best and Final
As a buyer, in a multiple bid situation, you will often be advised to present your best offer- put forth your best price, your best terms, and remove contingencies if you are able, etc. This has always been sound advice given that you typically get only one shot in a multiple bid situation. With one chance to present your best face to the seller of the home and with others doing the same, you do not want to miss out by holding back, so give it your very best - sound advice. However, a new wrinkle seems to be emerging in some of the multiple offer scenarios. Sometimes, when sellers are receiving multiple offers, 6, 10, 12 offers, they will review the offers, take the best few and go back to those buyers, letting them know they are in the ‘final round’ and asking if they would like to do anything to increase or enhance their offer before the seller makes their final choice.
As a buyer, your choice now is to stay put with the offer you presented or enhance your offer by changing price or terms. This is a conundrum as you were presumably giving it your best shot to begin with. So it is a roll of the dice as to whether you give it your best and hope to outright win the bidding war, or whether you give it 99% and hope that you will be in the final few with a bit more to give. Sometimes, the best offer wins the first round and no ‘final round’ is even considered. Each multiple bid situation and each seller will want to handle the situation in their own way. The best you can do is to ask your agent if there is likely to be a ‘final round’ within the bidding process. At the very least, you will be aware that this may happen and better prepared to respond if it does.
Not necessarily a new phenomenon, but more prevalent in this market, is what we will call the Outlier (with apologies to Malcolm Gladwell). Much like the outlaw who kicked in the saloon doors in old western movies, the Outlier arrives to take control of the situation. They are the buyer who wants the property enough to cast aside all caution and present an offer which is far higher than any other (often in complete disregard of property value), and/or remove all contingencies in order to secure the property. You may find yourself in the position to be the Outlier, if not, there is not much a competing buyer can do to defend against them. Wish them well, and move on, your perfect home may be hitting the market next week!