During our last sellers' market which I have dubbed the "feeding frenzy", it was difficult for buyers and their agents. Almost every house had multiple offers presented. Buyers would get their hopes up only to have them shattered like safety glass. When I conveyed the bad news in person, I could almost see the figurine of my client splintering away. My job description: creative problem solver and grief counselor!
Buyers and I would find their dream house only to be outbid or rejected for some other reason. Two problems existed. We couldn't know how much the winning offer was until the house closed some 4-6 weeks later so we had no idea how much we lost by. The second problem was that many buyers couldn't afford to outbid their competitors. Some buyers didn't care how much they paid and the offers were sometimes more than 10% over the list price. They just WANTED THE HOUSE!
The first year of the feeding frenzy caught us all unawares. Agents were worried the high bids would be a loss if the market righted itself the following year. Agents knew their clients needed a house, but did we dare counsel our clients to overbid as much as was needed to win? Buyers were scared they'd never get a house! I finally realized that there IS a price that can be paid for "just wanting the house". It doesn't matter what the house is worth. What matters is getting it. This principle didn't apply to all buyers but it definitely did with some. I carefully went over the pros and cons of the offers made during this time. Some people chose to buy at any price because it was the right house. Others were more conservative and wanted to test the market a little more. One of the key questions asked by many agents during this time was, "If we make this offer and you lose by $xxx, are you going to be devastated?" If the answer was yes, they discussed how high they really wanted to go. If the answer was no, they presented what they wrote.
Agents knew there was always another house that most often was a better house for their buyers, but the buyers didn't have this experiential base to go by. The normal excitement of the shopping experience sometimes became one of hopeful despair.
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