Multiple Offers
When your agent tells you there is more than one offer on the house you like what are you going to do? Does this mean you are going to have to overpay?
Remember when a seller wants to sell quickly he will have his listing agent price the home strategically. The agent will list the price considerably lower than the last sale. This could be as much as $10,000.00. This strategy creates an "auction" effect. If the home therefore sells for over the asking price ie; listed at $299,000.00 and sold for $310,000.00 then the seller has just sold the home much faster than if he had say listed it at $329,000.00 waiting for offers.
Did the higher-priced offer overpay? Certainly not, why? because it is the simple rule of supply and demand. Now any houses on the street comparable to this home will sell for the same price or higher. The street now has a new market value.
If you choose the right buyer agent, when a home comes up under market value, that agent will know that this is the strategy the listing agent is using to generate multiple offers. It will often say on the listing "no showings until..." and "no offers until....". Your buyer agent should then inform you that you should be prepared to make an offer that may compete with 2 or 3 others.
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