Last week, we explored the strategies to navigate through multiple offers from the buy side. In this week’s Insight Article, we’ll take a look at how to navigate through multiple offers from the sell side so that you can get top dollar for your property.
Economics 101 – Real Estate, when you break it down, is a very simple game of economics: supply and demand. If you understand how to market the supply and demand, then you can use it to your advantage. We had a few listings this month and we navigated through each of them differently, with a different strategy for each. This is why it’s imperative that you hire a good Realtor to buy or sell because they should be able to pinpoint the best way to create demand for a property. Unfortunately though, 80% of the Realtors don’t do anything when they get a listing, other than putting it on MLS. The real estate profession is VERY saturated, but I digress – more insight on the profession next week!
I’ll use 2 of our recent listings as examples on how to position your property to create demand.
- Prime downtown condo (multiple offers)
- Old house in Newcastle (no multiple offers)
So we did our usual thing with pretty photos and got the listing ready. However, we did something different for this unit though – we forced all of the first weekend showings within a small window of time on the weekend, fully knowing that all interested buyers would run into one another while getting the keys. This created even MORE demand. We also marketed the unit for sale to the entire condo complex because we knew nosy neighbours would want to come and see the unit, thus adding to the in-demand feeling. That first weekend, we got over 50 showings! Of course, we held offers, and got the due diligence package ready for buyers in preparation for offer night. Offer night came and we got 6 registered offers, but actually 8 came through.
Photos of the unit are below.
The Offer Night – My client agreed to try a new offer night tactic with me. More often than not, Realtors allow buyers to improve their offer with multiple offer rounds, which often leads to long offer nights. What we did instead was that we used a strategy whereby the deal would be done in the most efficient way possible, and all buyers would only get one shot. At the forefront, this may seem counter-intuitive because most buyers in these multiple offer situations would always start low, with the intention of improving their offer in the subsequent offer rounds.
Heavy Hitters – However, what actually happened with our new strategy for this waterfront unit was that all of the real buyers came out to play and the ones who were not serious about winning the bid were immediately weeded out in the process. In a situation with 8 offers, 2 were pretty unspectacular (as expected). The remaining offers were all so strong that 3 of the offers even broke the price per square foot average for the building! At the end of it all, we got both the preferred closing date and the highest price that we wanted for our seller.
The moral of the story here is to create more demand if you can, even if there is already naturally high demand, especially if you know that the supply for your type of unit is on the low end.
Example #2 – Old House in Newcastle with No Multiple Offers – This property was on the far east side of Toronto (Newcastle), with a 1.5 hour drive from Toronto. As a result, the demand here is not huge. This property was also quite old with a furnace that needs an impending fix. The previous Realtor had been trying to sell it for about a year, with no success. So how do we create demand for this property?
Forced Demand, Does It Work? Luckily for us, this was an entry-level, single-family detached home around the mid-400’s. You must be thinking – a freehold, detached house in the mid-400’s?! I know right! The supply isn’t strong, but it isn’t weak either; I would say it’s balanced. With a property like this, most Realtors would recommend that you drop the price, put an offer date on the listing and hopefully because of that, it draws in traffic and sells quick. Try to create demand with multiple offers – that’s what the seller had generally heard from other Realtors before. That’s incorrect, at least for this type of product. You cannot create enough demand to force multiple offers on a property like this. On offer night, this often employed strategy will only make your property even less desirable because there will only be 1 offer, or 2 if you’re lucky. Our strategy was to re-adjust the price, increase the buyer’s commission and create a better product.
Going Against the Grain – Simple and nuanced things are what ultimately resulted in a sale within only 1 week. We re-adjusted the price by $5,000 to show good faith that we wanted to sell, hence creating demand. We increased the buy side Realtor’s commission, thereby creating Realtor commission demand because self-serving Realtors sometimes don’t even show their clients properties unless the commission is 2.5%. We also made some minor and inexpensive tweaks to the house to create a newer, more finished-looking product, such as re-painting the trims, new outlet covers, and giving the living room a feature wall.
The photos below are the before and after images, respectively, of the unit before and after making the minor tweaks. What a difference a few small changes make, eh?
The moral of the story here is that for certain assets in certain neighbourhoods, you simply cannot create enough demand for multiple offers. There is no one-size-fits-all strategy when it comes to buying and selling real estate. Every situation is different and it really does take the knowledge of an experienced Realtor to get the job done, and the job done well.
The Wrap – I hope that sheds some light on how to get top dollar for your property. Creating multiple offers is just one tactic, but it doesn’t always work. If you’re looking to sell your house in the future and you’re wondering what the best strategy is to get top dollar in this market, then make sure you reach out to us. Our team is here to help guide you through the process every step of the way!
Until next time, Happy Real Estate-ing
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