Do multiple offers mean anything these days?

The practical file

Do multiple offers mean anything these days?

Let's say a seller in this market, accustomed to and fully expecting multiple offers to push the sales price of her home far above list price and into the rarified air of 2005 prices, gets eight offers yet ends up selling for a paltry 3 percent above list. Can she be excused for thinking that "multiple offers don't mean anything these days"?

She can, at least during the initial letdown—You think buying a home is emotional? Try selling your home!—and yet let's look at what those eight offers led to and, more important, the benefits they offered the seller:

Two hundred or so people through two open houses, almost all of them looking and sounding like serious buyers
A sale that held together through escrow, at a time when buyers panic at news of stock market loses and economic Armageddon
A home that sold in nine days, three times faster than the neighborhood average of twenty-seven
A home that sold 3.16 percent above list, instead of the neighborhood average of 2.98 percent below list
A home that sold to the most motivated and qualified buyers, who stood head and shoulders above a pool of mostly motivated and qualified buyers
A home that sold to buyers who performed beyond the letter of their offer
A home that sold to buyers with great agent guidance and representation
A home that sold, period, unlike the 78 percent of homes on the market that month in that neighborhood that didn't

After seeing all these happy and related events, I think we understand that multiple offers do mean something these days. And while agents in the know you got eight offers in this market? think the listing agent walks on water, we also understand that this was very much a team effort. A great sale doesn't just take a great agent, it takes great clients, willing to listen to their agent and go the extra mile.

So how do you get eight offers these days?

I'm sure the first answer that pops into your head is, "Grossly under-price the home". And, sure, this will work, but it's a brave seller who agrees to let his home be listed far below its likely market value. There's also the question of fairness: while the de facto auction process so popular for selling homes in this area is far more fair than its critics think—it gives every buyer the chance to buy the home, not just the ones who scan the listing Web sites every fifteen minutes and can see the house fifteen minutes later—no one is served by implying that a home can be had for 10 percent less than its probable sales price.

No, you get eight offers the old-fashioned way: you earn it. A good price, one that gets real buyers off the fence and through the door. A great house, buffed to its highest luster, that excites buyers when they see it. An outstanding presentation, using staging and the simple, cost-effective marketing tools—no full-page ads in dying media, please—available these days. And a well-managed orchestration, from preparation to offer presentation to close of escrow.

And, I have to admit, a bit o' luck. Because, despite best-laid plans, an effort this complex can go off the rails at any point.

Speaking of which, let's see how things could have gone.

Instead of two hundred people through two open houses, the sellers could have gotten just a handful. Not only would this have greatly reduced the likelihood of a sale, it would also have had the listing agent ready to hang himself by 4:00 that Sunday and the sellers in a similar mood shortly thereafter. Rejection is bad for team morale, which is bad for team effort, because a beat-up seller and agent are a desperate seller and agent.

Instead of sailing through escrow, the sale could have been derailed by bad economic or political news—not that we've had any lately.

Instead of selling quickly, the home could have stayed on the market for months, a lame duck and an easy target for bargain hunters and other riff raff.

Instead of selling above list, the home could have lingered on the market unsold, with a price reduction or three to advertise the fact that "we're rudderless and adrift, in an ocean of excess inventory and declining values. Just tow us out to sea and use us for gunnery practice".

Instead of selling to the most motivated and qualified buyers, the home could have sold to buyers who "needed more time to think" and then, once they'd thought and signed on the dotted line, thought yet again and decided that, no, they really didn't want this particular house in this particular market.

Instead of selling to buyers who went beyond the letter of their offer, the home could have sold to buyers who played games, either because this was their plan all along or because a few days into escrow it seemed like the plan that best fit their motivation and character.

Instead of selling to buyers with expert representation and guidance, the home could have sold to an agent who disappeared the morning after the contract was ratified.

And instead of selling quickly, the home could have been pulled off the market after sixty or ninety or one-hundred eighty days of costly futility, to be rented "until the market improves".

All "could haves" that can and do happen, especially when the real estate market turns scary. So multiple offers do mean something these days. They mean that something was done right. They mean that everything will probably turn out as well as it can.

And they sure beat the alternative.