Following a sluggish winter, the Vancouver real estate market is beginning to show signs of recovery. With the bank of Canada pausing interest rate hikes properties are now attracting more attention and seeing more multiple offers.
Denny and Monica share their personal experiences in a market shifting from a slow one to multiple offers being more common.
This episode will talk about multiple offers in today’s real estate market, leaving your seller enough time to get the best offer, picking a date is irrevocable, no more bully offers, the cooling off period, current bidding wars and the importance of communication between buyers and sellers.
Read the Transcript Here
Hi everyone, I’m James Garbutt. And I’m Denny Dumas. And this is the Garbutt Dumas Real Estate Podcast.
Denny: Multiple offers are a thing again. Very often, very often, it’s overwhelming as a consumer sometimes when we shift from a slower market where you’ve got time and there’s no pressure and market or listings on market for weeks and weeks at a time to – here we go.
They’re looking at offers on Monday. We gotta get prepared this weekend. Do you want to do a pre inspection? Here’s all the strata documents, let’s go through them and chat about them. Make sure you’ve sent the property documents to your mortgage broker. It’s a different pace. It is curious to note though, in this multiple offer scenario, that writing an offer is revocable. But picking a date, picking a date to look at offers that’s irrevocable.
Monica: It’s crazy.
Denny: So we want to talk about that form too. The new form came in last fall, maybe something like that, the Irrevocable Direction Regarding Presentation of Offers (IDRPO) – it’s a mouthful. This is a form that that we’re discussing with a seller at the beginning of the listing. We are discussing whether or not to pick a date to look at offers or look at offers as they come depending on the strategy, the listing depending on their timeline, et cetera but multiples are back.
Monica: They are back and talking of this irrevocable form. It’s really, it’s really a delicate situation. It certainly was the last few months to even decide to use one or not. Because you, from a listing agent standpoint, you don’t want to scare people away from offers. And there’s such that, there’s such this this stigma of multiple offers means it’s going to sell so much over asking that doesn’t always, that’s not always why we put a irrevocable direction of representation for offers.
The reason why we do it usually is to give buyers time to see it. If we list on Monday and we don’t take offers until the following Monday it’s not because we’re expecting multiple offers, always. It could be because we just want to get the best offer. We want everyone to have a chance to see it. We want our seller to have the confidence that okay, we had it on the market for a full week. We had offers on this day. This is the best we could do after this market exposure. So it doesn’t always mean that there’s multiples but a lot of buyers and many buyer’s agents that aren’t as experienced will see that form in on your listing and say they’re expecting offers that means this one’s getting multiples.
So you have to, it’s a really delicate situation and you have to plan it very well if you’re going to use this form because it’s irrevocable.
Denny: There’s a lot of reasons to use the form. Another would be it’s a strata property, you’ve ordered strata documents, they’re not coming in till Friday, you listed on Monday. You don’t want to look at an offer till you have strata documents so that buyers can be prepared and write stronger offers.
Another one is for a single family home, maybe ordered an oil tank scan and that scanner can’t come until Thursday. Same thing, you want to have all the information for consumers to make good decisions and write a stronger offer if they choose to prior to looking at offers and that is often a reason to use this form as well. The, there’s pros and cons to using the form. If you get to that offer date, and you only have one group that is interested in offering now you’ve lost leverage versus if you were willing to look at that offer or that with that group’s offer on Tuesday, because they message you as soon as it listed and they got in to see it within 20 minutes, because that happens every now and they would have wrote an offer right away. And that offer potentially could have been stronger because they thought they were getting ahead of other buyers.
Monica: The urgency for sure.
Monica: Yeah, we kind of take that power away from our seller as soon as we decide to use that form. So it’s, it’s a new form. I think people are still trying to figure out how to use it, when to use it. I would say when to use it is the strongest situation if you need docs. If you’re waiting for the due diligence that you need in order to list it. We can’t always, in a perfect world we would have started documents before we listed, we’d have all these things done before but the timing of listings is something sometimes completely out of our control. So you can only do the best you can with what you have. But you have to be careful because if you put the second you put that form on there, it’s irrevocable and you just have to live with your decision but like Denny mentioned, you can put an offer in a subject free offer, and you don’t have to live with that decision. It’s kind of silly, eh Real estate is wild.
Denny: Yeah. I wish there was a little more correspondence with people who work in the industry when these things were decided but it is what it is. We play the game the way that they tell us to play the game. And whether or not it makes sense is not our decision.
Monica: There were a few times and during hot market conditions, there’s a few times where Realtors would put a DRPO out there, which was the DRPO was before it was revocable apparently. It was the same exact form only that one could be revoked, this one can’t. So there would be times where listing agents would post it and then all of a sudden you would hear that the property sold and your clients thought that they weren’t looking at offers until Tuesday but by Sunday it was sold so this form is to prevent that from happening. It’s supposed to make the market more fair. It’s supposed to give everybody an opportunity to see it. There’s still ways around it. But the reason for this form all has to do with multiple offers which we’re starting to see more of. So if you have a property that’s priced within market value right now, especially we’re seeing a lot more multiple offers. So have you seen like a lot of the irrevocable forms on those or have you just heard agents being like “Yeah, we’re looking at offers on Tuesday.”
Denny: It’s kind of 50/50 and I’d say it’s slowly starting to steer towards, more towards people posting the form. People listing on Monday and waiting till the following week to look at offers. That’s more and more common in the last two weeks than it was in January, February. Let’s share a little recap on dealing with multiple offers both from buyer and seller side.
So let’s start with the listing side. The best way to get the most for your seller and be the most prepared for looking at multiple offers on Tuesday evening or whatever that may be.
Monica: Yeah, multiple offers. We’ve said this many times on our podcast, they’re so important to how you handle multiple offers is a major game changer. Agents that do it really well do really, really well in this industry. They consistently have the higher sale prices. They don’t have agents mad at them at the end of it, the seller is happy, the buyers are happy. The goal in selling a property always should be to do the best for your seller but for both parties to feel like it’s a good and fair deal. And how you handle multiples actually start the day your property is listed.
And that goes back to do you have a forum posted for the offer presentation? Is it clearly stated on your listing? Are you letting buyers know that when they come through so they don’t feel in the dark? Do you have all of your due diligence ready? So all of these things before multiple offers even happen are extremely important. Having the documentation that you need, being a well informed Listing Agent and being able to inform buyers. That all plays into being an agent that handles offers really well and then there’s the offer day.
The offer day communication is extremely important. Get up in the morning, have your coffee and then send everybody a message saying just a reminder, we’re looking at offers today at two o’clock. Please let me know if you’re going to write an offer. There’s a lot of agents that think they’re really clever and they wait until the last minute to send their offer. That’s fine. But if you wait until 2:05 to send your offer you might be making it more difficult for the listing agent which they might not like. Or you might get lost in the shuffle. You might get buried a little bit and, and you need to call and follow up and make sure the listing agent has received your offer.
There’s a lot of communication that happens even when there’s only two offers the listing agents are getting called a lot. They’re getting called by their seller. They’re getting called by both parties, that you know they can get. They might have other deals happening. So getting, from a buyer standpoint, from a buyer’s agent standpoint, if you want it to go well for your buyer, we can talk about this a little bit. But how you handle multiples is also really important. It’s not just up to the listing agent. But when it comes to negotiating and getting the most of the offers, listing agents that handle multiple offers really well constantly get better results.
Denny: It’s a learned skill like anything else. It comes with experience. It comes with trial and error. And each scenario is different, but the core number one most important thing is communicating.
It is, it’s unacceptable for a buyer’s agent to not know how many offers they’re competing against. It is unacceptable for a buyer’s agent to not hear from you, as a listing agent for hours, after the deadline. Put yourself in a buyer shoes, when someone has spent all this time and energy writing a strong offer and they submit it at 5pm. And they’re just twiddling their thumbs thinking about this every second for the next three hours. And 8pm is not a super long time. There’s been times where we don’t hear back to the next day which is hilarious.
8PM is not a crazy amount of time but in a buyer shoes, where this is like a very stressful situation. There is a lot of anxiety, they’re putting a lot of money on the table that probably and a lot of scenarios they feel uncomfortable with. And so that three hours feels like months to them, right. So communication as a listing agent, I think is the most important thing. Communicating well will get your seller more money, will get you a better result, will build trust with the buyers agents, will build your reputation in the industry.
And it is as simple as calling everyone back and just letting them know what the situation is. “Hey, Jim, you know, when I spoke with you 45 minutes ago, it seemed like there was gonna be four offers. We now have six. I just wanted to let you know you’re not in the lead at the moment. If you’d like to adjust anything, let us know otherwise, you know, we’ll probably go, be going a different direction.” Though that quick phone call, it takes 25 seconds and it, it results in better outcomes for your client and it results in buyer’s agents really valuing the opportunity to have the chance to win.
Monica: Right. So let’s talk about it a little bit from the buyer’s agents spot. If you have a client that is probably going to offer on a property, it’s really important that you see the property from the beginning if you know it’s a property that your client will be interested in. It’s a great idea if you can go see it. The buyer will trust you more when you’re telling them about the value. It’s, it’s hard sometimes, good agents are busy, so they can’t always see it with you but they can go see it at some point. So if you can make sure you see the property. Make sure you’re reviewing the documents ahead of time, make sure you’re reading the listing, the entire listing. Make sure reading the realtor remarks. Make sure you’re reading the write ups, make sure you click on the documents, make sure you read the documents. The more you know about the property, the more you can ease your clients nerves about what they’re buying. You can answer their questions. You know what to expect.
Some listing agents put lots of directions, lots of instructions about offers in their documents so read them. I had to write an offer yesterday, well day before yesterday for a property where the agent had five pages of instructions. It was a probate sale and it was going to multiples and the lawyers had very specific stuff they wanted and did not want in the contract. So I had to read five pages of it and then go through my offer and make sure everything matched up because I didn’t want them having to correct anything on my offer. I wanted my offer to be the most perfect offer that they received. Because if it was $1,000 or $2,000 or even $5,000 they might just pick mine because they don’t want to deal with doing corrections with someone else. So make sure you really really read all the instructions and know, know how to prepare your buyers. It makes them feel more confident and comfortable. And it makes them feel that the offer they put forward is valuable and and they’ll be more likely to put themselves in a position where they can win it if you know everything that you can about the property and about the process.
Now on offer day if you can prepare your offer early enough and have it ready a little bit before offer presentation time, listing agents really like that. They don’t like getting them after offer presentation time. If you have an offer coming late, let them know, let them know early so that they can readjust and plan.
The seller personalities are all different. I have had a seller recently. I told him offer presentation was three at three o’clock he wanted to see every offer, he had taken off work. He was sitting there by his computer. He wanted to see everything and had to tell him “Well, I just heard from an agent that like his client is late and they’ll be sending their offer around Four.”
My guy was like I don’t care. I don’t want to see it. I took off of work, I thought offer presentation was at three, he like it really went against his personality type and he did not like, the property was on the market for seven days. Like that was it. And I was like are you sure you don’t want to wait, wait for another offer. From a listing point stand, from a listing agent standpoint, I was like let’s wait but he hated it. He didn’t like it. So make sure you get your offers in on time. Make sure you’re reading the instructions. Make sure you’re informing your buyers
Denny: With the cooling off period now in 2023. It is exceptionally important as a buyer’s agent to build your reputation and build your relationship with the listing agent. So that comes in a few different forms. Communicating well with the listing agent, letting them know that you’re gonna be writing an offer to expect that, your offer will be coming. Asking them the right questions so that you can make or put together a perfect offer if there are specific things that the seller doesn’t want included in the in the in sale, a light fixture that they you know have a lot of value and then they plan to take, whatever the little details may be the dates that they’re looking for.
These items in multiples can be hilariously important, even though they seem so insignificant, right? You’re buying a $2 million dollar house, that light fixtures worth $500. Really, does it really matter? Yeah, sometimes it does. Sometimes the seller puts a lot more value on that than the actual financial value of it.
When you send the offer to a listing agent, remember that with this cooling off period, a buyer can walk away for any reason within those three days, right. Any reason. So if you build a story, and you’re sharing a lot of information about the buyer and you’re giving confidence to the listing agent, especially if they’ve never heard your name before, if you’re building confidence in them that you have a very strong buyer. This is who they are. They’re a young couple, they have a dog, they love this backyard. They are working with one of the best mortgage brokers in BC. They have a pre approval, whatever, whatever little details we can share to make it look stronger.
One, it builds confidence in the buyer but it also builds confidence in you that you’re, you know what you’re doing and you’re, you’re going to be able to work through a challenging conversation if it ever comes up in those next three days. Right. If you just submit an offer, send Denny Dumas – offer 123 Smith Street, send. Monica on the other end as listing agent has no clue who I am. She doesn’t know who the buyer is. She doesn’t know if the buyer even saw the home. She has no information about their financial situation. Can they afford this? Are they going to renegotiate in this cooling off period? What’s going on? Versus the perfectly prepared offer. Here’s a bunch of information about my seller or about my buyer. Here’s the dates that you’re looking for. We’ve included a $50,000 deposit. This is why, here’s our offer number. Please call me back if there’s anything we can do to make our offer acceptable. You know, we’ve reviewed all the documents, we are totally fine with that little blurb that you put on the property disclosure statement. We have checked that easement on title, sellers or buyers totally fine. Here’s an initial title search that like, every little checkbox is ticked.
Guess who Monica is going to work with? Guess who she’s going to call back first? If she’s not the type that calls every single person back, guess who she’s going to call back? Not me. She has no idea who I am. She has no idea who the buyer is. She has a lot of confidence in buyer number two who like she knows everything about now, they have a kid named Justin or whatever, right?
Monica: I’ll tell you a big trick when it’s multiple offers on a strata. This is a very, very big trick guys. Brace yourselves. When you call the listing agent and you tell them yeah, we read the depreciation report. They already saw that in 2023 there’s something, if you drop a little hint that you have read the depreciation report, that you’ve read all the minutes. If you give the listing agent confidence that you know what’s in the minutes, not just like, oh yeah, they went through the docs. Like if you give them a very specific detail about the property. The listing agent right away is like okay, they’ve done, they’re like they know all this stuff, and they’re, they’re writing an offer anyway, that is a really, really good trick. It works a lot. I’ve used it very often. It gives them confidence. If you’re neck and neck the listing agents can say well, I know this agent has read the minutes, she mentioned that she knew that the roofs were coming up next year. So if you give them a little detail like that, it definitely increases your chance of getting picked. Yeah, because that all comes down to just being informed. Being informed.
Denny: Multiples are a thing right now. Getting prepared on the buyer side is very, very important to have a conversation with your realtor early. To understand what multiple offer scenarios look like, how to be prepared fully. How to write the strongest offer when you find something you love. So I think it is super important for someone looking to upsize, someone looking to buy something this spring and summer to connect with me and Monica at our team. Connect early. There are a lot of fine details that are just too time consuming to talk about in a podcast, but it is really important that you are prepared and we have all that info early to write a strong offer.
Monica: Yeah, and if you’re thinking about buying this spring, have that conversation with your agent right now. If you’re a realtor, have a conversation with your clients right now. Let them know from the buy side we’re seeing more multiples, educate them what that means. It doesn’t mean they’re overspending. I think that that’s the number one thing that I hear and I don’t want to get into multiple offers, because they think that that means that you’re overpaying. It doesn’t, it means you’re paying market value actually which is kind of exciting. Yeah, just have those conversations early so they know what to expect. It doesn’t mean they’re not doing the due diligence, we’re still doing it. Just preparing your clients a little bit better. preparing yourself a little bit better, will help you be successful.
Denny: The term bidding war in gray Vancouver is a trigger. Yeah, it’s fully triggering for the majority of people. The idea of a bidding war. Remember, no matter what the scenario is, it doesn’t matter if there’s three offers or 633 offers, it doesn’t matter. We are going to educate you on what is our opinion and our thoughts on market value of this property. You don’t have to write an offer higher than that, but understanding that just because a property listed at $999 doesn’t mean the market value is $999. So writing an offer at $1.2 million might be a friggin steal if you get that property because it’s worth $1.4, right?
But this idea of bidding war and like just, it’s a tough mental scenario going into that can be really challenging for a lot of people. But I think it’s just, it’s important to understand like, list price we say this all the time, list price does not equal market value. In busy markets, in slow markets. There are two different things like an appraisal, a market value and the BC assessment. There are three separate things. Market value, and list price. Two very separate things depending on value.
I mean, there’s lots of scenarios right now. And again, this misconception that like, because there’s multiple offers, I have to go over asking. Separate the correlation between list price and sale price. There is none. Every scenario is different. If a property is listed at $999 it might not be worth $999. It might be worth $1.2 It might be worth $925. Just because you get into multiples doesn’t mean you’re spending over list price or writing an offer over list price. You’re writing an offer where you think the property is worth and often. often right now for I mean. it’s happening on all product types, but often right now, we are seeing multiples and it’s selling like just below this price.
Monica: Exactly. Yeah, yeah, exactly. We’ve had, we I should definitely clarify that we’ve had multiples on properties that have sold under asking but asking price like you just said, is very rarely do we meet with the seller and they say okay, I want to sell my property for $1.209 and then we list it for $1.209. And then we say we’re taking nothing but the asking price that has never happened. Okay? It’s usually, we think it’s worth this and this range. And then we jus,t we give our clients a range and then we say okay, if you list at this price, this is at the lower end of market value range, we think that you’ll be very busy in the first week or two. The chances of you getting multiples are, is greater, and we expect that we at this price, we should sell it within two to three weeks. If you listen at the high end, we expect that you’re going to be listed for about a month. Showing could be fewer, offers could be fewer and we will sell under asking. And we just give them the options and then they choose. But never, ever, ever do we ever tell them your property will sell for $1.209 That’s never happened.
Denny: It is one of the biggest things that we try to get across to buyers and sellers. List price is a number. It’s a marketing number that we pick to try to get the best results for the seller and depending on the market conditions that strategy adjusts significantly. Sometimes like, I keep saying $999 because the house a buyer offered on a New West house last week listed at $999 Sold $1.3. But like $999 is a ridiculous number, right? The house was worth in my opinion mid to high $1.2, so it’s slightly above my guess.
Monica: Was that the one on Tenth?
Monica: Okay, yeah.
Denny: Slightly above my guess. But at this point, it’s like it’s a pretty unique home that there hasn’t been anything like that for like 12 months so, guessing the exact sale price or something like that is impossible. But $999 clearly is, is a joke of a list price.
Monica: They wanted multiples, they wanted to sell it right away. That was all they wanted. That, you could see that, from that price. Nothing is sold for $999 in that neighborhood in ages.
Denny: Six years. Yeah.
Monica: Years. Yeah.
Denny: I think that is, is the biggest thing with, with buyers and getting over this fear of bidding war. If you really love a home. literally the worst thing that can happen is you write an offer at where you think market value is and someone else buys it because they pay more money. That’s the worst. But the idea of this frenzy and bidding war and I’m an overspend, you don’t have like, you decide what number goes on the paper not, not just because there’s a bidding war.
Monica: It’s emotional, it’s a lot of these types of situations can be very emotional. I have a client that lost in multiple offers last week, and they hated that they were multiples, they didn’t want to be in multiples and we’ve had lots of conversations since and they’ve really got their head wrapped around it. And I can’t wait to find out what the sale price is because I gave them my number and I really feel like I’m gonna knock it out of the park on this one and they’re gonna trust me more on the next one. Well, it’s just what happens.
Denny: 100%. This spring. Get ready. There’s gonna be more multiples. There’s not enough inventory.
Monica: Prepare yourself.