The strength of this sellers’ market is unprecedented in my 35 years in real estate. It is affecting every market in North America. It is particularly strong in suburban, semi-rural and rural markets. Inner-city commodity condominiums are the exception, but even those markets seem to be finding their base.

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I know that many of you are incredibly frustrated with this market. If you represent buyers and don’t have a strategy to win these multiple offers, you are working hard and making no money. Let’s try to change that.

I work with some very productive agents in different markets across Canada. From their experiences, I learn a lot. First off, the agents that are excelling right now are predominately listing agents, and frankly, that is the only way to have sustainable success in real estate. Those same agents do represent buyers, and, in most cases, they are successful in getting their buyers into a home in a reasonable period of time. So, what are they doing differently?

Here are the five most critical steps:

1. Let go of your belief about the market value

When a property sells for over the asking price, it is not selling for over market value. Market value is simply the value that a buyer and seller will agree to when neither is under undue duress. When supply is low and demand is high, the market value increases quickly. When the market is rising fast, you can’t use past sales to indicate market value. Past sales tell you what a different buyer was willing to pay for a different property in a different market. That information is valuable, but it is not necessarily tied to market value.

I purchased an investment property in the Gulf Islands in B.C. recently. I was looking for the past few weeks and had some interesting interactions with agents. I had three different agents tell me that the market was overpriced and I shouldn’t be buying. They touted their theories passionately, and when they finally gave me a chance to speak, I simply asked, “What if you are wrong?” This prompted them to tout their theories even more passionately. I didn’t hire them.

None of us can know where this market is going. The best economists in the world don’t understand the current market complexities. The real estate market could collapse. It could continue to increase dramatically. We don’t know.

Pull out your definition of market value, share it with your buyers and help them decide what they are willing to pay for a property.

2. Educate your buyers before they enter the market

It is exceptionally complicated to buy a property right now. Your buyer clients will likely be in competition, and they are hiring you to help them win. The team that wins the Stanley Cup has an incredible amount of skill, knowledge and impeccable teamwork. You’ll need the same.

Buyers’ agents have been lazy and lackadaisical with buyers, which won’t cut it in this market. If you don’t have the confidence and courage to step up and represent your buyers, you shouldn’t be working with them. You are doing them a disservice. This means interviewing your potential buyers, educating them on the market’s complexity, getting the exclusive buyer contract signed before you see any homes, and then building a strategy with them to ensure a successful purchase.

3. Build a strong strategy

Together with your buyer client, figure out what it will take to buy a property in your market. Gather all the essential information to help with this. How big is the buyer pool? Are all winning bids unconditional? What are the prevailing listing strategies? While the seller has the lion’s share of power, how can you earn back some power? How will you uncover information about the seller and the listing agent? This is where your negotiation skills are critical. You must have an in-depth understanding of negotiation principles to win.

4. Help your clients make good decisions

None of us want our buyer clients to overpay, but if you insert your opinion and they don’t buy, and the market continues to increase dramatically, you have hurt them irrevocably. Keep your opinions to yourself AND help your buyers by not putting them in a place of duress. Duress puts them at risk of overpaying. As a strong listing agent in a sellers’ market, I was always looking for the buyer and/or buyer agent who was under stress because I knew that they would likely overpay.

5. Keep your client under the radar

The more offers your client makes, the more the listing agents know about them and can use that against them. For my Gulf Island purchase, I watched the market closely for a few weeks and then swooped in and bought a property before the agents on the island knew much about me.

It worked – along with several other negotiation principles. Imagine if I was looking and bidding on properties for weeks. My chances of success would go down dramatically, and I would likely have to pay up big to be successful in buying a property. Under your exclusive buyer rep agreement, you owe the buyer confidentiality as part of your fiduciary duty. This is always critically important, but now, more than ever. Take your legal responsibilities seriously, and you will shine well above your competition.

Properties are trading. The number of transactions is high. This market is extremely complicated. If you aren’t getting your share, it’s time to up your game.  My negotiation courses have been adapted for the current market condition. If you haven’t taken them, why not? And if you have, many people are retaking them to improve their performance in this market.

10 COMMENTS

  1. Multiple Offer situations immediately puts Buyer’s in a situation of duress. Your strategies are basically useless. Waste of space. And will not help either Sales Representatives nor Buyer’s trying to purchase a property. The question is. Is this market really that hot? Or have Realtor’s just become very good a talking Seller’s into listing way below market values to generate multiple offer situations. Do you really believe a listing Realtor is going to do research on 30 Buyer’s submitting offer’s on a property? And how do a number of unrelated listing agents and home seller’s know anything about a Buyer? And how do you go about finding a Seller’s weakness? Follow them around for a few days? You sound as if you are trying to write a Hollywood Fantasy Script. If Buyer’s want to do something that will benefit them and improve their chances of purchasing a property in this hot market here is what they can do. NEVER OFFER A HOME SELLER MORE THAN THE PRICE THEY ARE ASKING. I understand that this strategy may also fall in the Hollywood Fantasy category but think about it. All Selling Sales Representatives work together and never offer more than the list price. This may achieve two things. First, it will force a Seller to negotiate with a Buyer. Think of that. A listing sales representative may actually have to do some work. Or it will force home Seller’s to actually list their homes at , or above, market value. You almost came close to making one relevant point but you never quite made it there. And I am not sure your definition of “Not under duress” is accurate. Disregard market value? What a realtor has to tell their Buyer’s is to disregard the listing price and only consider the selling prices. In some of the markets I work the listing price has almost become one standard price. $399,900. Regardless of the fact that all of the properties in that neighbourhood have been selling for $585,000 and up. This extremely low pricing strategy is more responsible for driving values up than actual market conditions. And it fools Buyer’s actually looking in a $400,000 price range that they can possibly purchase that property. And all these Buyer’s want to try an offer, don’t they? If today’s Buyers were actually as savvy as they believe themselves to be than they would turn the tables on Seller’s and gain an advantage themselves.

  2. Point number one: During times of demand exceeding supply (nowadays), there is always undue stress for buyers to contend with. Thus, buyers may tend to overpay, according to their overriding desire to get hold of a property instead of another buyer. This situation has nothing to do with market value; it has to do with market pricing. It also has to do with emotionalism. When emotions rule, people react poorly to rational thinking, and therefore fall victim to the herd mentality scenario…which is not a scenario; it is reality. This current market is when buyers tend to be under undue stress. Thus, market value becomes skewed, and becomes instead irrational market pricing. Value and price are not the same. Value is in the eye of the beholder. Price is what a rational actor will pay, not absolutely needing a particular property, unfazed by emotion. So, market value nowadays is not really what properties are actually worth, because the market is unbalanced. Today’s prices are simply what desperate people are willing to pay. If the prices drop (not values), desperate people struggling to keep up with their payments will then want to get out from under mortgages that are under water—mortgages that have dollar amounts higher than what the market will bear in a resale situation. It’s not about market value; it’s about market pricing.

    Point number two: Vladi nailed it.

    Point number three: Find out the seller’s weakness(s) and use it against them. Thus, get the listing agent to give up confidential information about the seller and use it to your buyer client’s advantage. That’s life.

    Gotta go now. Numbers four and five later

    • Further to my last post at 11:08 a.m.

      Point number four: Re “Keep your opinions to yourself”. I disagree. Clients absolutely want to know what you, as their advocate, think. Thus, tell them, but in a way that doesn’t invoke their obedience. I always voiced my opinion, but with this caveat: “I’m not going to tell you what you should do, but I will tell you what ‘I’ would do in these circumstances, considering my personality and judgement, and also considering that I don’t need this property.” Then I would ask if they wanted to hear my opinion; they always did. They didn’t always follow up on what I said, which was as it should be. At least my clients made more informed decisions, at least based upon what I had to say. (By the way: I never, ever, tried to sell anything to anybody. I advocated for them always, no matter what they chose to do.)
      As a professional Realtor, your opinion ought to count for something, ‘else you are not a professional worthy of the title, REALTOR.

      Point number five:

      Nice pitch, Suze.

      There’s no such thing as “…you owe the buyer confidentiality as part of your fiduciary duty…but now, more than ever.” WTF??? Do you mean you didn’t owe as much duty previously under more temperate conditions?? You owe that same conscientious duty ‘regardless’ of market conditions. C’mon Suze…get that oversight corrected.

      I didn’t chime in here just to make noise. Suze has some good advice. It just needed some tidying up here and there in…my opinion…and this poster’s opinion’s free! No commission or potential contract on the line with this guy:-)

  3. Hi Suze, great read. As a real estate broker in a rural area north of Montreal; I can attest to the fact that most of what you said is spot on! You need to ”list to last” in any market to survive and this seller’s market has really shined a magnifying glass on that theory! I am curious why you think that your Gulf island strategy was the most effective way of getting a good deal? Would it not have also been advantageous to work with one (or more) of the agents on the Island to make sure you were actually making a good purchase? I’m not sure what the market situation was there when you bought, but I doubt listing agents would be strategizing with their sellers on how to exploit a single buyer who has made offers on other properties. It just seems very specific and a bit far fetched! I guess I’d have to know all the details of that particular situation to draw an accurate conclusion. My point is that it’s usually a good idea to spend a bit more time and talk to local experts before pulling the trigger, rather than jump in for fear of a conspiracy theory against you as a buyer! I’ve been looking at a purchase in St-Martin for quite a few years and am very familiar with the island and legalities, and although I can represent my self (and receive a commission), I have entrusted my purchase to an agent who lives on island and has been selling here for over 20 years. I want to make sure that I 1. Am 100% solid legally 2. Am able to get proper insurance (hurricane, etc. 3. Have financing and all associated costs in order 4. I trust their ability to negotiate something here better than mine since they know the market better than I do!

  4. It was reding like an interesting article that might have something new to say about a long-standing challenge of multiple offers. I have a property listed myself currently and deliberately chose not to hold an auction or to under-price the property to drive multiple offers.

    Point 1. was a worthy read but the remainder of the article was mostly fluff without substance. This hit home in the summary after Point 5 when the author wrote, “It worked – along with several other negotiation principles.”

    Referring to other principles took away all the value that was promised in the title of this article.

    The article didn’t answer the title of the article. It just provided a few preparatory and rudimentary steps to better manage the emotional roller coaster ride that buyers undergo in these challenging times.

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