At the peak of the real estate market, the supply of homes was somewhere in the range of three months.  As a buyers agent, the scarcity of homes meant that it was common to be one of multiple offers on a property within a few days of the listing coming on the market. Those were the “good ol’ days” of real estate where money flowed like honey. Today a multiple offer situation seems like a relic of a bygone era. Like an old friend coming back around after years of absence, the days of the multiple offers is becoming a more common theme than most people might expect.

 

Multiple offers are both a blessing and a curse. Competition for a home is just a pain when you are trying to buy. It makes naming your own price difficult and often removes the luxury of unlimited time to make decisions. In all reality, the situation of multiple offers on homes is happening most frequently to highly discounted distressed homes right now.

 

No matter your position in a transaction, multiple offer situations can be a blessing. For a seller, a multiple offer situation helps get terms that are appealing and allows them to negotiate from a position of strength with offers being more competitive and appealing.

 

In winning the home, the buyer will enjoy a pseudo-third-party-validation that the home was a good deal plus the joy of victory from beating someone. When a home has been on the market for an extended period of time, there is an inherent question expressed or otherwise of seriously over-paying for a home. Multiple offer situations may result in a buyer paying a nominal premium in order to get a home, but the difference between offers is usually in the range of 1-2%.

 

Multiple offer situations on a home are tricky because you never know exactly the offer the other party is making. Normally, a seller will notify the parties that there are multiple offers and will either ask for each party’s “highest and best offer” or will counter both parties with the combined best terms from each party (so long as the offers are generally acceptable).

 

As a buyer, you have to know what the home is worth to YOU and be willing to let it go if the numbers aren’t what you’ll be happy with paying. You can’t control or predict what the other party’s position is in an offer. All you can do is the best for your situation. For everyone else in the market, be encouraged that competition for the lowest priced homes is a signal of some form of recovery.