Multiple Offers

More than half of the time, says Tom Gaikowski, an agent with John Greene Realtor in Naperville, agents receive multiple offers on a listing. “Since mid-January, there has been a much higher percentage of multiple offer situations for properties in good condition, in good locations, with good access to highways and trains.”

With multiple offers, every buyer has a chance to make their best offer, but because of low inventory, homes are selling within days of going on the market. It’s up to each individual seller whether they choose to go with a multiple offer approach. This is a strategy where the buyers offer what the agent and seller believe is the highest they’ll offer, and then the agent and seller share with the buyers that their “final offer” is up against another offer – or up against more than one offer. Then, Powell says, the agent should give the buyers the option of strengthening their position in any way they might like to.

“I find that this has been the most successful approach in getting the best value for my sellers,” she says. “Buyers tend to expect they may be up against another offer, if not the day they submit, perhaps within the next 24 to 48 hours of negotiations.”

According to Stultz, multiple offers are expected now on foreclosures, and she’s starting to see them often on properly priced regular sales and even on short sales. Some of her buyers have had to lose a few homes in a bidding war in order to accept the reality of the marketplace.

“One of my biggest challenges here is convincing buyers that we’ll often be facing competition for a home,” she says. “Many of them are still in the frame of mind that it’s a buyer’s market and they can pick up properties all day long for way under the asking price.”

Interestingly, distressed homes and foreclosures are still having an impact on the market, although not as much. As recent as April, the National Association of Realtors reported a 29 percent drop in the share of sales of distressed homes to just 18 percent of all existing-home sales. That’s the lowest share since 2008.

In addition, distressed home sales accounted for more than a third of all existing-home sales nearly a year and a half ago. Nationwide, foreclosures and short sales accounted for 18 percent of April sales, down from 21 percent in March and 28 percent in April 2012. Eleven percent of April sales were foreclosures, and 7 percent were short sales. Foreclosures sold for an average discount of 16 percent below market value in April, while short sales were discounted 14 percent.

“We have seen a huge decrease in marketing time and an increase of multiple offers on most foreclosures,” Stultz says. “This is being driven by a small decrease in foreclosures, but a much larger decrease in regular for-sale homes.”

Foreclosures are still selling for market value in Stultz’s area, the west suburbs of Chicago, but she adds that she has seen a small price increase because of the limited amount of homes that can close quickly.

According to Gaikowski, foreclosure and short sale markets remain in all price points in far western suburbs. It’s still a sizable portion of transactions. He added that distressed sale situations haven’t changed in last three years, and they often sell for less than fair market value.

“There are fewer and fewer short sale and foreclosure homes,” he says. “There is still an inventory being held by the banks and they continue to trickle onto the market. Because they are more like a ‘traditional purchase’ to some buyers, foreclosures are an easier transaction than short sales, which have more unknowns.”