Writing Simultaneous Offers on Multiple Homes in a Competitive Market
Some cities around the country are in the middle of extreme sellers’ markets right now, as inventory is scarce, prices are rising, and financing is inexpensive.
So there’s every reason in the world for a buyer to purchase a home right now, but there just aren’t enough of them available.
Weekly housing frenzy is tough to navigate
The feeding frenzy of buyers and lack of inventory are creating a repetitive situation each weekend in many neighborhoods: new listings come on the market near the end of the week, so buyers and their REALTORS® scramble to see them and even pre-inspect before the weekend is over.
These multiple offers are reviewed on Monday or Tuesday at a pre-defined time set by the sellers. Buyers write offers at or above the list price, waive contingencies, and do every creative thing they can think of to stand out from the other buyers.
In the end, though, every one of them loses except one single buyer. The scorned would-be buyers and their REALTORS® return to their research, reset their emotional meters, and plan for the next weekend of showings.
The cyclical nature of this process can be challenging for consumers and pros alike. A ready, willing, and pre-qualified home buyer should just be able to buy a nice home in a good neighborhood. In a perfect world, buying a home shouldn’t be a juggling act.
An advantage for buyers
The reality of the current marketplace, though, requires buyers to lean on every potential advantage they may have. While it’s not appropriate in some situations, the strategy of writing simultaneous offers on multiple homes can bring a buyer a bit of leverage in these markets.
If a home buyer is viewing multiple homes in a neighborhood with fairly homogenous sizes and styles, increasing their odds by writing simultaneous offers on multiple properties may be that little bit of an edge getting a buyer into a home and out of the seller’s market hamster wheel.
Some real estate agents will bristle at the thought of this practice, but as long as it’s done with integrity and honesty, it can be an ethical method of increasing a buyer’s likelihood of “winning”. Sellers, in this market, are holding all of the power and squeezing it for all it’s worth. They need not be sympathetic to a buyer who wants to write an offer the first day on the market.
Owners make everyone wait, lining the buyers up like cattle to write their offers on the same day, maximizing the competitive atmosphere and encouraging a bidding war. Leveraging buyers against one another is simply an effective and time-tested strategy to maximize the sale price.
So, why would a well-qualified buyer not use their own leverage? If there were just two or three similar homes coming on the market that week, why not write simultaneous offers on multiple homes Saturday morning and tell the sellers you’re doing so?
As long as the buyer is truly committed to buying any one of those homes no matter which seller responds first, giving each of the sellers 24 hours and the notice you have other outstanding offers may create a slight sense of urgency on the part of the sellers. Not every single home receives multiple offers. A bird in hand, in the form of a well-qualified buyer who obviously has options, might just be the thing motivating a seller to sign an offer early … or to select the buyer playing “hard to get”.
Always a risk
This strategy, of course, has some risk built in. The buyers might turn off the sellers, making them think they are not truly committed to purchasing the home. A less provocative approach might be to simply write simultaneous offers on multiple homes without the timeline restrictions. If all of the homes involved will truly be satisfactory to the buyers, when the first seller accepts an offer to purchase, the buyers can simply rescind their offers on the other homes.
Also, buyers should be of the mindset that whichever seller signs the contract first, that’s the house they’re buying. And to be clear, writing simultaneous offers needs to be done with great care and full disclosure.
In the end, there’s no real harm done to the other sellers who’ll probably have more offers to review, save for a little extra potential paperwork review. That’s something buyers in these markets who’ve been doing the purchase offer carousel won’t feel particularly bad about causing. Having multiple offers out on equally-desirable homes merely increases the buyer’s odds of buying a home this weekend instead of three weeks down the road.
Writing simultaneous offers on multiple homes requires a lot of research, forethought, and quick action. Buyers must be able to remove emotion from their decision process and verify that these various homes would all satisfy their needs.
They, and their REALTORS®, need to be prepared to act quickly on offers to fulfill their contractual obligations as well as to not unduly burden the sellers of homes which they won’t be purchasing. It’s a strategy that is not always appropriate, and the plan doesn’t always work. However, it is just one more valuable tool to have at your disposal as a home buyer in a seller’s market.
