THE MULTIPLE OFFER CYCLE

While the seller’s market cycle continues through yet another season and the constant question continues to still be how long will this market last, we now encompass the frenzy of the Multiple Offer Cycle and still know, that all of this will change.

Obviously, it’s still great to be a Seller in a Seller’s market providing, however, that it fits into your investment strategy and your own personal life cycle.

The best way to achieve the highest price for your property is to list it with an active apartment house broker specializing in the area where your property is. Pricing the property is based on recent sales of comparable sales of like kind property in the same location as your property and ideally within a quarter of a mile radius. A market evaluation should also include comparable properties which are currently on the market for sale, buildings which are currently under contract to sell or in escrow and buildings where the listings have expired and the property did not sell. Be extremely cautious of the broker who is going to “buy” your listing, this translates into listing the property at a much higher price than it is worth with continual price reductions until it sells at the price that it should have initially been listed at. Forget the fancy “Power Point” presentations and the 4-color bleed brochures. These are marketing tools which do not necessarily translate into bringing you a higher sales price.

Currently, there is still quite a bit of overpriced inventory listed on the open market that simply just does not sell. A property that is priced right will generate activity when it is exposed to the open market and will often generate multiple offers. When handled properly, multiple offers can effectively achieve a higher selling price. The multiple offer feeds a frenzy unto itself which can sometimes lead to generating unrealistic offers often by unqualified buyers and ultimately does not result in the high sales prices that were originally offered. It’s a good idea when doing a physical inspection with the accepted offer to allow the other prospective buyers to also view the property at that time. This puts the accountability on the buyer with the accepted offer just by knowing that there are other interested buyers and also allows the other buyers to move forward and proceed with a purchase contract in the event that the existing offer to purchase does not go through. This is also good management as it is less intrusive to tenants and limits the number of inspections if the initial accepted offer does not perform.

A qualified buyer is a buyer who has the wherewithal (cash) to purchase the property under the agreed upon price, terms and conditions. Prior to even putting the property on the market for sale, have a lender (or two or three lenders) quote the actual amount that will be loaned against the property. A real buyer must have the minimum in cash to a new loan (and often has all cash). Verify where the buyer’s cash is coming from, if it is coming from the sale of another property, verify the status of the sale of the other property and that the cash will in fact be available to purchase your property.

The strength of multiple offers allows the seller to continually be in the driver’s seat, commanding the sales price, terms, and choice of services (escrow, title, pest control, disclosures reports, etc.) length of escrow and selling the property in its current As Is condition.

Most importantly, prior to selling, make sure that a sale makes sense for you and what your tax basis is if you are simply doing a straight sale and are not exchanging into another piece of property. Many sellers are simply not willing to pay the prices for which they are currently selling. Some sellers may have already located an upleg to exchange into, are choosing to carry back financing, have set up a CRT (Charitable Remainder Trust) or have such a low basis that a straight sale makes sense.

There currently remains lots of speculation and indications of a slowing down in the single family housing market which has historically been followed by a slowing down in the apartment market. Alan Greenspan’s projections and forecast indicates this and it remains to be common knowledge. Many qualified Buyers remain waiting in the wings to see what is going to happen and do not want to get caught up in the fever and the infection of the multiple offer cycle. Remember that it is still the Buyer who inevitably pays the sales commission based on the sales price and remember what goes around comes around.