Last Sunday, at an open house, the agent there told me (proudly) that “Eighty-five parties came through last week.” When I hear that, I hear “Eighty-five parties rejected this house at this price.”
A swarm of buyers at an open house does not always lead to a bidding war. How can you discern if it is the real thing, or just a fantasy of the seller or the seller’s agents?
Commenters on this blog persist in their view that there are no legitimate bidding wars going on. They speak of dual and designated agency making it so that all agents are in cahoots with all other agents. They claim agents put shill offers on the table. They claim friends, family, and other agents act as pretend buyers...
There may be some slime-ball somewhere who actually does this, but I find it hard to believe anyone can stay in business behaving that way, especially in the age of internet communication. I do, however, agree with commenters who are saying that open houses are packed with “lookey-loos” or “tire-kickers” and also nosy neighbors.
In the spring, when demand peaks, I have less room for negotiation with seller agents, since the supply-demand ratio is not in my client’s favor. So, my “just say no to bidding wars” mantra is self-serving in that regard. I would like to see no bidding wars. That said, if you are a buyer looking to buy this spring, how do you separate the sight-seers from the legitimate buyers?
Watch the other buyers.
Real buyers are serious in manner. They go in the basement. They are looking at the house, not the stuff in the house. They are discussing furniture placement. They are asking questions about the house. They are meeting with their agents outside to talk.
Sight seers are casual in manner. They are having fun. They are joking around about style or personal items. Sometimes, you’ll see these people taunting the agent running the open house. They behave like the buyers in the movie American Beauty (who mocked the agent’s description of the back yard.) If you watch a clump of nosy neighbors, you may see them adjourn to another house on the street.
If you see two or more parties that look serious in the time you are at the open house, the sellers may have multiple offers.
Look at the house.
If the house is competitively priced, well located, a useful size, and in good condition, it is a candidate for a quick sale. Competitively priced: Agents are slightly underpricing housing. This, they hope, will draw buyer(s) who will lose their head(s) in competition. Well located: Great commuter spots and toney neighborhoods draw a crowd. Useful size: Condos that are bigger than average for an area and houses that are right-sized for a family with a couple of children are popular. Condition: It a place is renovated and attractive, it will draw a crowd.
If one of those dimensions is off, the likelihood goes down. Properties that are overpriced from the start are mostly still for sale. Houses in bad locations, or ones that are a little too small, or ones that need work are selling (for a reduced price.) The ones that are overpriced, given the location, size or condition, are still sitting until the price comes down enough to attract someone.
What are you seeing out there?
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