Ever wonder how a house can sit on the market for months then all of a sudden have multiple offers on it?
This happens way too often to be a coincidence. This is a phenomenon that actually causes a great deal of problems for a lot of buyers. They look at how long the house or property has been listed and assume that there is not real hurry in putting in an offer and then find themselves in multiple offer situations and consequently pay more for the property than they would have if they were not in a multiple offer situation. Actually, there is a fairly simple and logical explanation for this phenomenon.
At any given time there are a number of buyers out there looking for a similar type of property or home. So for instance let’s say that there is a home in East Hill in Vernon BC in the North Okanagan Valley. This home has 3 bedrooms and is priced at $400,000. Now hypothetically consider a “value Grading system” for houses in this area and price range, at this time. For instance, from a value perspective when this house comes on the market it is graded as #4 compared to its competition.
Then another house is listed that is better value so it is now #5. Now 2 houses sell so it is now #3 on the value grading system.
Now 4 more homes are listed that are better value so it is #7 on the value scale. So this house fluctuates up and down on the value scale for this neighbourhood for 6 months all the while having other homes that illustrate better or lesser value get listed and sell around it.
Then - after 6 months of no sale, the houses of better value sell and the house in question slides in to first place on the value scale. There are 3 people out there looking for this type of house in this price range. Now we have 3 offers on a house that has not had any offers for 6 months.
The house in question simply slides into first position on the value scale.
This is also a good explanation for the importance of price in Real Estate Marketing. In other words the only way to increase your value rating is either improve the house substantially or bring down the price.
Many times we list a house and we have no showings and no offers. Then we inch the price down in $5000 increments. After 3 reductions we start to get showings but no offers. Usually one more reduction will bring an offer.
The rule of thumb in Real Estate is that if you are getting showings but no offers you are a little overpriced…if you are getting no showings and no offers you are a lot overpriced.
But after all you always have to remember this is just the world according to Bill.
Broker, Owner of Century 21 Offices in the Okanagan.
The Okanagan Real Estate Hub - Century 21 Vernon, BC