If you listen closely on a quiet night in Alberta during a low inventory market, you can hear the sounds of sellers' REALTORS® navigating offers and counteroffers into the late hours. Of course, I jest, but the reality of a low inventory or seller’s market does add all kinds of new complications to the process for sellers and their REALTORS® which aren't as evident in a more balanced market. Let’s take a few moments to consider some of the high points.
Timing TurbulenceA seller’s market is temporary. That shouldn’t be a surprise to anyone outside of Vancouver or Toronto, but sellers can sometimes forget that their advantage today can quickly shift to a buyer’s market in Alberta long before the news stations pick up on it. The very best way to stay current on local real estate trends is to have a candid conversation with a REALTOR® and not to make the mistake of trying to time the market. When a seller is ready to sell and move on to their next home, there is no time like the present for predictability since markets in Alberta are forever shifting. It’s like Sir John Templeton once said, "the four most dangerous words in investing are, it's different this time.”
Leverage ShiftIt is not uncommon to see multiple offers in a low-inventory market because the multiple buyers are slugging it out for the same property. When the seller receives multiple offers, they start walking with a swagger and making demands of the buyers regarding price, terms, and conditions that suit their purposes. Of course, I am exaggerating a little for effect, but it is important to remind sellers that the moment they sign and send back that final purchase contract, all that leverage transfers to the buyer. The seller is instantly beholden to the buyer and the conditions entirely for the buyer's benefit, while all the competing buyers scurry off to find another property. It's not a bad idea to maintain some goodwill and cordial relations with the buyer during negotiations for this reason. If you put buyers through the grinder during negotiation, the buyer may look to repay the favour during the conditional period.
Don’t get TwitterpatedAny fans of the film Bambi will get the reference, but it is not uncommon for a seller in a low inventory market and presented with multiple offers to get twitterpated or fuzzy-headed with the offer price. Part of the REALTOR® job is to help a seller give equal consideration to all the terms, conditions, dates, and details in all the offers so the seller can make decisions that best match their larger goals and not only price. Although the auction mentality of driving up the price is exciting, sometimes the best play is to focus on the offer details and try and get the best price you can from that buyer whose terms and dates are most likely to help the seller achieve their goals.
Dealing with DisappointmentsI have often said that one of the most difficult parts of being a REALTOR® is the emotional highs and lows. It is not uncommon to have multiple highs and lows even in a single transaction that can be extremely hard on clients and REALTORS® alike. Add in a healthy dose of multiple offers, a sprinkle of a high-stakes negotiation, a dash of lender promises, and a last-minute home inspection, and you have a recipe for tears. It is not uncommon to go from king of the hill in a multiple offer situation to losing the deal on financing or a tough inspection, so it is paramount that the steady rock in the relationship is the REALTOR® who has anticipated the possibilities. If possible, consider working on backup offers once an offer is accepted, keep a list of interested parties who call for viewing during the conditional period, and above all, be actively and cooperatively involved in the details of the transaction right up to closing day.
Although a seller’s market is the dream of sellers everywhere, it is not without its challenges for both sellers and REALTORS®. It is not a guarantee that a seller will get multiple offers in a low-inventory market but using a REALTOR® will always be the best chance a seller can have to get the best deal, in the shortest timeframe, and with the least number of complications. During a hot seller’s market, recognize that listing REALTORS® have an increased level of anxiety in a decreased timeframe, and a buyer’s REALTORS® have a whole other kettle of fish to deal with. As colleagues, we are never too busy to be kind, and as clients, understanding goes a long way.
Provincial Practice Advisor
Bryan has many years of experience in the real estate industry including over 10 years as a former broker in the Edmonton Region.
Email: firstname.lastname@example.orgPhone: 403-209-3619