The Vancouver Life Real Estate Podcast Episode 9 - How To Win In A Multiple Offer Scenario
How To Win In A Multiple Offer Scenario
Multiple offers have become the norm again in Vancouver Real Estate, especially in the detached market under $2m. Here we share the 12 best tactics to use to ensure you come out on top with the winning offer, and make that home yours.
How To Win In A Multiple Offer Scenario
Dan Wurtele 0:02
Hi, and welcome to The Vancouver Life podcast.
Ryan Dash 0:06
This podcast is created to answer the most talked about questions when it comes to navigating the Vancouver real estate market.
Dan Wurtele 0:12
I'm your host, Dan Wurtele, a licensed agent and accredited Real Estate Investment Advisor based here in Vancouver, and I'm joined by my co host Ryan Dash.
Ryan Dash 0:22
Hi Dan. I'm also a local realtor and exhausted father of two, husband of one and really happy to be here.
Dan Wurtele 0:30
Let's get right into today's episode. Hi, and welcome back to the Vancouver life podcast. On today's episode, we are discussing multiple offers.
Ryan Dash 0:43
Yeah, multiple offers are very common in Vancouver in a lot of different market conditions, but I guess what we should talk about first is what exactly is a multiple offer?
Dan Wurtele 0:56
Yeah, exactly. So a multiple offer essentially is when you are going to buy a home, and there is more than your offer on the table, you're in essence competing against one or more other offers.
Ryan Dash 1:09
Yeah, it's multi level interest at the same time over the same property and, you know, with Vancouver with the amount of really cool property that we have here, we often see multiple offer scenarios.
Dan Wurtele 1:26
Yeah, if you remember, or we're trying to buy a home through most of 2016 or 2017, especially under the let's call it 1 million to 1.5 million price point, I would say upwards of 70 to 80% of all properties were selling in the first week with multiple offers for over the asking price.
Ryan Dash 1:46
Yeah, and I mean, multiple offers sounds scary, and it's a rather stressful thing to have to go through. Which is why being prepared for multiple offers is something that when you're shopping for property in Vancouver, you must absolutely get prepared to do
Dan Wurtele 2:06
Mm hmm. Because it can change quickly, you know, we could be in the middle of a buyers market, and next month, its sellers and multiples are back, or even, you know, when the odd nice property hits the market, you can suddenly have more than one buyer and it definitely changes the whole dynamic because it's not just you versus the seller, in a sense, and then negotiating between that but now again, like I mentioned, it's you versus another buyer versus the seller.
Ryan Dash 2:33
Yeah, it's the right conditions in the marketplace, coupled with a popular property that a lot of people are trying to buy. When we do find that property Dan what, like how do we set our buyers expectations because I really think this is an important step here. There's a lot of disappointment around multiple offers, depending on how many people I mean, I know that this year I heard of one where there was 42 multiple offers that went down on one property. That means 41 disappointed people, at least or groups.
Dan Wurtele 3:11
That's right. Yeah, the numbers like we mentioned can be anywhere from two offers up to literally over 40 It's a huge number and it's, it's it's a case by case is how we approach it and of course, you know, discuss with our buyers how they should expect things to roll out. You know, we've had everything from, let's say, a crazy seller's market where almost anything that we're looking at is going into multiples and we can address it very early on, all the way to okay, well, there's no one else bidding on this home. Awesome. We've submitted our offer. Well, guess what? Phone rings 15 minutes later, Hey, sorry, guys got to let you know we've just received a second offer and at that point, things change as well and we advise accordingly so there's there's a full range of when multiples can come into play.
Ryan Dash 3:54
Yeah. No, I it's it's when you're in the middle of a deal and You're you're negotiating back and forth and hail mary comes in from somebody else. You really have to have another plan a backup plan in place. I think before we get too tactical right away, I want to talk about how to maybe identify what could be a multiple offer on a particular property. You know, like, for example, I'll get the odd question from a client who will send a property back to me saying, hey, look, you know, there's all these one bedrooms for sale in this building, let's say there's three of them. Two of them are listed at 500,000 or within, you know, $10,000 of each other and this other one here is $70,000 cheaper. So, why is that cheaper when it's exactly the same?
Dan Wurtele 4:48
Yep. And the go to market price, the price that you see publicly on the MLS or otherwise is part of the marketing plan, and if they are pricing well below market value, that is too entice multiple buyers and try to create a multiple offer scenario. And quite often it works for just that reason, right? People are looking at a price, why is this one less? Let's go after it, you build excitement, you build an emotional attachment to it, maybe you go look at that home before you look at the others because you think you can get it less and next thing you know, you really want it and of course, then you're entering into that potential scenario.
Ryan Dash 5:20
Totally and I think that's where the relationship with your real estate agent and knowing your numbers in the neighborhood and the strategies that are going down are very, very important here if you you're going to get a chance to win. You know, when I often see a property that's listed, well below market value or even below assessed value, I will directly ask that agent, you know, are you anticipating getting multiple offers, and they will often tell me that, you know, they've priced it in such a way so as to attract that
Dan Wurtele 5:54
exactly and quite often in advance if they know they are doing that there is form to be filled out. It's called the direction of presenting offers and it basically says, Yeah, we are we have this one for sale, but we won't be looking at offers until, let's say, the following Monday around 6pm. This way, it's letting all the buying agents know that they can have that conversation with their buyers right away and say, Look, there's a good chance this property is going into multiple offers. So let's prepare accordingly.
Ryan Dash 6:24
Yeah, it's not your your standard way of buying a home. But it is certainly, I would say a quite a common strategy that's employed here in Vancouver by a lot of real estate agents. You know, there's when, when you're dealing with human emotion, especially with where people live, oftentimes, in a multiple offer, people have subjective value, not just objective value, but they love it they've fallen in love with the property, and what does that mean in terms of what you'll pay for it? And that's what they're trying to do. So, you know, when you get into that position you'll want to have done your homework you'll want to have set you know a ceiling price you'll want to have understood when the right time to potentially walk away and when to get more aggressive would be
Dan Wurtele 7:18
important to know that multiple offer scenarios can come up anytime and I think is a very good and recent example of that. In the midst of the Corona virus crisis the week of April 21, I believe it was within our brokerage alone I heard with our from six other agents that they had gone into multiple offer scenarios at that point. So you know, April, one of the lowest sales volume months on record, and the odd home was still selling in multiples So, so to work with an agent who has gone through multiple offers many times before in successfully many times before, who know how to navigate not only the offer, but the scenario, then it's only going to help you In your case to win that home. Yeah, there's, there's,
Ryan Dash 8:02
I think, anyways, there's very much a process that goes down when it comes to winning in multiple offers and to do that, you know, I think it starts with setting expectations. You know, if you're falling in love with a one bedroom property because it's $349,000 and the other one bedrooms in the proper in the building are $500,000 I can tell you right now you're falling in love for the wrong reason. Because you will never get that property at that price. You have just walked through something and now the strategy that the sellers have employed is starting to work right. So now you think that maybe I can pick this up for $400,000. But your homework with you and your realtor needs to be done prior to to understand that the reason that they are likely pricing it this way, is because it's actually worth more than the other two that are in there and they're trying to get at leveraged. So they're going to use a buyers keen interest or emotional value against yours to try and push the price above what may be the market value.
Dan Wurtele 9:11
It's important to, again understand the tactics that we can employ to help get your offer ahead and make it essentially stronger than any of the others that are in front of you. So I think Ryan, we can start unrolling sort of the top 12 things that we have sort of in our back pocket that we can utilize within the offer to help make sure that you get the home you want.
Ryan Dash 9:33
Totally. I think number one, and everybody hears about this all the time. What does subject free mean because subject free, sounds like I'm giving everything to the seller and not protecting myself, which really is exactly what that is.
Dan Wurtele 9:52
Yeah, no, it is it is subjects. As you may know, subjects are what we are included within offers to essentially protect the buyer and give them a due diligence period to assess the property inside and out. Obviously, the most common ones are you're subject to financing to make sure your bank can put a mortgage on that property, we have subject to inspection to have an inspector come through make sure the property is sound subject to obtaining insurance at a at a price that you're okay with and of course, subject to any document review, should it be a stratified property.
Ryan Dash 10:25
Right, but in this instance, because we're going to be competing, we don't have any time to do that or if we do, you know, we see the property on Thursday and on Monday, they're taking offers. So how do I, you know, get financed and how do I make sure that I that the property isn't, you know, broken that I'm not buying something that's decrepit, or falling apart? And how do I know that I'm not going to be able to have you know, afford the insurance because let's be honest, there's also an insurance crisis going on here in stratified units and It's putting a lot of pressure on, on buyers to complete in in very short time periods.
Dan Wurtele 11:05
Yeah and you know, to understand why you go subject free, ultimately it makes the contract what we call very clean and it essentially should it be accepted by the seller means the deal is usually done right then and there. So, that's why it becomes very attractive and
Ryan Dash 11:24
it wins every time.
Dan Wurtele 11:25
It wins every time. That's just sit right. We certainly have seen or been on both sides of offers where money does not talk as much as subject free talks.
Ryan Dash 11:34
Yeah, yeah, that's right.
Dan Wurtele 11:35
I've seen offers, literally, gosh, 50, 60, $70,000 higher, that were rejected, or did not win because the lower competing offer was subject free.
Ryan Dash 11:48
Yeah. It means essentially, if the bank gets in into the deal, and they decide that what you're offering, isn't the value of the property, then you know, now the deal is subject to the bank's approval and that's not the best position for the seller, the best position for the seller is for that to already be in place. So that when they take the deal, it's done. You know, certainty is by far, especially in a very stressful environment, what the seller is looking for
Dan Wurtele 12:19
exactly, certainty wins every single time. I've actually never been involved in a multiple offer scenario, where there was a subject higher dollar value that ever won ever. And so why is that? Ryan, Why would people always feel certainty? I guess, let's look at what happens if that uncertain deal falls apart.
Ryan Dash 12:36
Yeah. And they do they fall apart often, right, So there's a number of things you know, when you're, when you're looking at that, that you you'll as a as a selling agent, when you're looking at all of these offers that you're going to want to compare right to try and find the best offer for your client and, typically, like I said before, if you have another party inside of that deal, whether it be an inspector, whether it be, you know, subject to a document review, it just creates doubt in the sellers mind that money can't fix because if the deal falls apart, we don't also understand all the time, sometimes we do, but we don't always understand what the seller is trying to do on the other side of that deal and so, you know, if, if money is all there after, you know, hopefully that gets communicated to us through their selling agent, but if that's not the case, and they're trying to close on another deal, or maybe they're trying to buy a business on the other side, and they need the money by a certain time, closing that deal right away without having somebody in between is exactly what they're going to want. Getting your client prepared to win. There are steps you can do so it's not just throw money at it and close your eyes and cross out all the conditions. We go about getting all of that done to the best of our ability prior to the offer date, and that would start with the Pre being pre approved.
Dan Wurtele 14:01
Yeah, exactly. So when we essentially know that we're going into a multiple offer scenario, or at least are very likely to knowing this in advance allows us to do, essentially the due diligence work prior to that offer date. So yes, instead of having an accepted offer and taking the next seven to 14 days, for example, to handle things like inspection and financing, we'll do it prior to the offer. That means we will talk to your bank, right? Ideally, you're already pre approved, and we'll say, look, this property here we're looking at offering it's listed for maybe $700,000, but we think it's probably going to go for about $750,000. Does this client are they approved for that much for this property? Right? Because we want to make sure that should they want to get an appraiser in they can do that early, because the last thing you want to know is great. You won the offer. You bought it for $750,000. The bank is only going to approve you for $725,000 and you are on the hook for the difference.
Ryan Dash 14:55
Yeah, that's not a great position to be in. So understanding what you can afford Before you start throwing it around is critical, especially in a multiple offer situation. The next thing we would definitely want to look at is an inspection. You know, if the property certainly isn't under a two 510, national home warranty, let's say it's a 40 year old condo or a 60 year old home, or maybe it's been an entirely renovated 100 year old home, we would want to pre inspect that prior to offer date. So it's likely that if there is an offer day that there will also be an inspection day or a time that we can actually send an inspector through to have a look at the property. The only part where this kind of sucks is if you don't get the property then you do have to still pay for the inspection, but still, that is what it takes in order to win the property.
Dan Wurtele 15:52
I walked into an open house in I believe it was March of 2017. It was a Saturday. It was a one bedroom condo. There were About 16 to 18 people viewing it, there were four pre inspections happening simultaneously.
Ryan Dash 16:08
I guess you could go to showings with your inspector if you paid him.
Dan Wurtele 16:10
Yes, that was one example, but yeah, of course getting that inspection in place, you know, it's a big decision either way and as you know, inspections are so important and spending that money let's call it four to $500 to either uncover a major issue or to give you the clean bill of health is a very important part of your decision making process when making that offer.
Ryan Dash 16:30
Yeah, it lets you actually to when you're let's say you're at your or very near your ceiling and you know, from your inspection that you've got to clean property, it's going to give you that sense of comfort to go all in and get that property right because you're not then going to be spending money having to fix it on the other side. So I think it's, it's, it's a great tool and something that you know, we encourage our clients to do all the time.
Dan Wurtele 16:55
Should it be detached older home, we may recommend an oil scan as well oil tank scan
Ryan Dash 17:00
If they haven't done one. That's right.
Dan Wurtele 17:01
Yeah, yeah. stratified properties of course, we are going to review all the documents in advance. This includes all your minutes your AGM, depreciation report, insurance summary, of course, all these type of things, right, Because we can uncover any issues or give it again the clean bill of health in advance, right and advise accordingly.
Ryan Dash 17:22
Yeah, the big difference here with with document review and stratified properties. If you're looking at a one bedroom condo, there's likely only so many things that are going to go wrong in a one bedroom condo. That would be naked or invisible to the eye. Certainly most things will be visible, and you'd be able to tell where you can't tell is how have they treated the building and hasn't received its regular maintenance? What does the concrete like? If it is concrete, what's the wood? Like? What's the foundation like? What are the windows like? You know, these are all things that would be reflected in depreciation report and engineering reports and active strata management. If that's not there, it's a potential red flag, especially for a lender.
Dan Wurtele 18:09
Mm hmm and of course, coming out of the insurance fiasco that we're still basically in reviewing the existing insurance summary is very important, you know, is the deductible for water damage, etc at 50,000? Or is it 500,000?
Ryan Dash 18:23
And is it renewed?
Dan Wurtele 18:24
That's right, yeah. And what's the renewal date is coming up and there's potentially a massive hike happening. That's very important to know as well and so using that insurance summary, you can go out and obtain quotes from insurers for that exact building for that exact property and make sure that you know, it is insurable at a price that you are happy with.
Ryan Dash 18:43
You know, we just went went through a multiple no, none of multiple offer a bully offer, which we'll get into shortly, after reviewing the insurance document, we were actually able to get a significant reduction in price because the premiums were going up so much It was unknown to the seller at the time, it's likely had the seller known about that prior to going to market and getting that renewal that they would have adjusted maybe their strategy accordingly. But they went ahead and put it on the market prior to the renewal date. Once the renewal came in, we were able to push it back. But anyways,
Dan Wurtele 19:18
perfect. So by doing all this work in advance, we now know how comfortable we are with removing some or all of these subjects in advance. Right. I one thing we should point out too, here of the 12 or so tactics that we have, we're going to know case by case how many to employ. Yeah, right. We've been in multiple offers where all it took was the highest price. Yeah. And we've been in multiples where it took all 12 to win to you know, so they are case by case, but you know, we're going to kind of share all of them with you to know that we can implement each in any of these at any time.
Ryan Dash 19:47
Totally. I mean, another really, really big one, which a lot of people probably more common than heard is having the bank draft in hand ready to go. A copy of that draft also making its way to the seller to show them that we have the money in hand ready to go. That coupled honestly, with a letter, you know, a human letter, something that's showing that this is not just a business or a numbered company buying the property that is somebody hoping to have hopes and dreams and maybe building a family or something to that effect in the property. It goes a long way because the seller at the end of the day is also human, right? And they don't know what's gonna make them them tick.
Dan Wurtele 20:31
I can certainly share a story where the letter connected and won the deal all day long. We were in multiples, there was about seven or eight offers, if I remember correctly, and it came down to two. And the other offer was higher, a four or 5% higher than ours, it was a big, big number. And the family I was representing was at their absolute peak and that had been communicated you know, with the with the listing agent and what was the deal was that we The family you know, a young couple with two kids wrote this letter and included a photo showing that they wanted to buy this home make it their forever home and literally just raised their family and you know, they there was a park across the street that was so important to them and even more so the elementary school where the daughter's best friend was, was attending was a two blocks away and so why this worked was the sellers raised their families at home,
Ryan Dash 21:28
they bought it for that reason
Dan Wurtele 21:29
they had exactly yeah, they had two young kids, they went to that same school and they understood it, they got it and the other potential buyer was looking to gut the home yeah, rip it apart and an Airbnb it,
Ryan Dash 21:43
there you go.
Dan Wurtele 21:44
Right. You know, and so, you know, the family, they they had lived in that home for like 30 years and it meant something to them and they wanted it to mean something to the next family as well. So in that scenario, literally not only did it like not take the most money, but it it went to great family, there's some nice human connection there.
Ryan Dash 22:02
And likely Dan came down to your ability to communicate that too. I mean, let's be honest here. You know, you could have sent the letter along there too. But if you hadn't drawn their attention to it emphasized the need for it, and why they're buying this property, and make sure that that's effectively communicated to the seller. You know, they're human beings on the other side of this thing. Yes, they need money to get to their next place. But you know, for talking about the difference of $10,000 over a million dollar mortgage between it going to somebody who is going to care for that home that they've loved for 10 years, and versus somebody who's going to tear it apart to, you know, profit off of it. Yeah, I wouldn't be surprised that, you know, families would choose more families, especially if they love their neighbors.
Dan Wurtele 22:48
Exactly. So that one is very, very useful tool that we use and employ.
Ryan Dash 22:53
Yeah, I guess we the next one we should talk about is the price
Dan Wurtele 22:56
Ryan Dash 22:58
Because price is critical.
Dan Wurtele 23:00
It really is and there's two things here. You know, obviously, again, knowing in advance that you're going into a multiple offer scenario and going into any offer scenario, we do a lot of research into what we consider to be true market value for that home in the landscape that we are currently in.
Ryan Dash 23:16
Yeah, I mean, like we talked about before the price, really, I mean, it's kind of a, either an ability to attract a ton of people into the property. Or it might be a, you know, in the market range. Either way, you know, it's important to try and figure out why they're priced where they are, and whether or not it's relevant, because, as we all know, for the most part, in a multiple offer situation, the price that's listed is just an offering to the market.
Dan Wurtele 23:46
Mm hmm. Exactly. So you know, we've seen properties go for as much as 20 to 25% over that listed amount. It's a big difference
Ryan Dash 23:55
that that property that received 42 offers Sold $600,000 over its list price.
Dan Wurtele 24:03
There you go. So that's something that you are hopefully mentally prepared for in advance. And to be honest, of course, we will also very much advise because in the middle or in the midst of a multiple offer scenario, emotions run high and things take over. Yeah and so you're going to be looking to us for advice as well and we absolutely have told people that look, this the price that it's gotten to, it's it's frantic, and it's illogical, it's going to take you years before the market value reaches that price where the current offer is at and you say, look, think about that. Walk away, walk away, unless it's the absolute must have super dream home. You know, we certainly advise walk away.
Ryan Dash 24:43
Yeah, you've got to have a ceiling here because your emotions likely won't. So, you know, preparing yourself in advance to know when to walk away is going to be very important. Because there there are other homes and there will be other options for you. If, you know it gets to a place where it becomes unaffordable, and oftentimes it does, right. So knowing that, you know, we can sometimes win the deal, as Dan spoke about, I mean, there there are other items or other tactics that we can employ to win it. But price is going to be a major, major factor and knowing that you are making that offer inside of the market range is important to your financing, too.
Dan Wurtele 25:33
Yeah, oftentimes, the listing selling agent will just say, look, this seller, he's just all about the number. Yeah, he just wants the biggest price or she wants the biggest price, whatever it is, and again, we pair accordingly. That's right, and approach it that way and again, we'll advise if we think it's a good idea or not, and you know, it also depends on your landscape. What you're looking to live there for three to six years. Are you looking to live there for 30 years?
Ryan Dash 25:54
Yeah, and just understand that if you do pay outside of that appraisal value, the shortfall will on you need the buyer that is to come up with the difference, right? So that's where that's the big important part here. Anyways,
Dan Wurtele 26:10
yep, very important. So, you know, along with price deposit in a multiple offer scenario, generally, you know, we still see 5% of the purchase price being the average deposit seen in the offer. Another tactic is you increase that, right? If you have the ability to come up with 10% or 15%. You certainly can edge out the other offers if they are similar, but their deposit is less
Ryan Dash 26:35
well, how does the seller read into that? Because, I mean, it just looks like more money on the contract. But let's say for example, you know, if I'm, if I'm the listing agent, and I'm going well, this guy's offering $50,000 as a deposit, and this one is offering $100,000 as deposit. Yes, it's more money, but what does it mean? It means that the buyer has a greater capacity to buy that property and such less will likely go on in terms of that deal collapsing. Right. The the likelihood of that happening is far less than if you go with somebody who has a lesser amount.
Dan Wurtele 27:10
Hmm. That's just it, it shows another level of their seriousness and capability. Yeah,
Ryan Dash 27:14
it's your ability as that buyer to communicate your intent.
Dan Wurtele 27:19
Outside of that, I know we talked about going subject free, but something else that certainly helps make a deal move forward quickly and smoothly is a clean offer and outside of just being potentially subject free. There are obviously other terms within an offer that if discussed, well in advance with the listing agent, you could ultimately be sending them an offer that is perfect to what both the buyers and sellers have verbally agreed to in advance, giving the seller the option to just simply sign and that deal is done. Yeah, because of course, you know, if it's close or it's a bit poorly written, or there's a term or two they just don't agree with. Then of course, they're going to counter back and now you have an open contract. Now you open yourself up to other offers buyers while the other offers but the buyer is also changing their mind. Totally. You know, and I guess one thing we hadn't touched on but would be agreed on prior is of course the dates. Yeah, right making sure that you can accommodate the sellers dates, if they are currently in the power position,
Ryan Dash 28:19
which is really important, because everybody else is going to be trying to accommodate their dates too. So it's almost you have to go with their dates. In a big, you know, it's important. The other thing I'll say here, when you're preparing a clean offer, your communication is very, very important. If you are going to tell the other side that you're going to come up with X amount of dollars on x day, you know, subject free, and then you deliver them a contract that's not exactly what you said. All of a sudden, you've not only just discredited your ability to get the deal done, because now you're surprising the seller, which is never ever a good thing. You know, they're going to read into that as what else is going to change along the lines here? Are you going to pull out? And as such, they might look at other offers?
Dan Wurtele 29:14
Mm hmm. Yep. Very good to know communication is is integral in almost any negotiation, but especially when we're going into a multiple offer scenario. Yeah. Okay. Next up, and definitely touching on the communication factor is how the listing or selling agent deals with multiple offers, because there is no rulebook, and you can technically handle them however you want.
Ryan Dash 29:41
It's the Wild West really.
Dan Wurtele 29:42
Sure, we've seen you know anything from agents being very open and saying what position you're in and in and around what it's going to take to get you into position number one, and then of course, come back to you and say, Oh, great, well guess what? Two other ones have come up here now in position three, and so forth. to the other end of the spectrum, which is we are going to do a one and done scenario, come forward with your best foot forward and we're just going to take that one offer.
Ryan Dash 30:10
Yeah, and I'm, you know, as much as I like the first option coming at it from the buyers perspective, sorry, with the second option. So coming at a multiple offer with a very, very strong offer off the top is a very important thing to do. For a number of reasons, but primarily it will separate you right from the beginning as a contender. That's number one. So the seller now has you in their shortlist number two, if you come out of the gates very, very strong. The likelihood of having the seller go back to the other offers to say hey, look, you know, you're in second third fourth position here. You know, we encourage you to come up the lead offers also gonna get that opportunity right now, if they're 50,000 $100,000 apart here, it may just be the case that because you came out of the gate so strong that the seller just decides to deal with you. Anecdotally, this recently happened to me. I mean, I, we were making an offer on a single family home. We went through, Oh, goodness, I would say seven of eight of these steps here getting everything done prior to the offer date and the listing agent telling us that we were going to go through the process, like Dan said, but step by step here. So if you're not number one, I'm going to give you the opportunity to come back, and you can improve your offer, and so on. So we came out of the gates. Very, very competitively, I would say 10% over the ask price and At which point, I thought we had a chance to improve and we were told if we needed to that we would get that opportunity. I got a call back about an hour later and the seller had changed their mind by how they were going to operate and navigate the deal. They had just taken a higher offer out of the gate, which was substantially higher than ours, another 10% on top of ours. So we were beat by somebody who came out because a couple things, one, they likely conditioned their cell or their buyer a little better in terms of the actual market value of the property and understanding that there were six other people trying to buy it. Oh, by the way, all of these offers, were cash, all of them. There's no financing, nothing, none of that. So it was, at one point, I think this the selling agent told me there was $12 million in offers on the table, all cash, which is crazy. So that's how competitive it is. And that's how quickly it can change. So knowing where you need to be right out of the gate. You don't want to be having to make hundred thousand dollar jumps. You want to be making $10,000 jumps. So if your 10% low or your 15% low right out of the gate, the chances of you winning that bid are very slim now.
Dan Wurtele 33:12
Very good to know. So again, open communication and really knowing, you know, which which scenario you are entering or potentially entering, or how to avoid something like what just happened, unfortunately, because that was a huge surprise. Who would have thought that but look, somebody else was willing to come up with that much stronger.
Ryan Dash 33:28
Yeah. And when I actually spoke to my client about it, you know, they were really all that sure if they would have done that anyways. So you know, they were okay to walk away from that property. It was a little bit of, you know, taking it on the chin because we thought we came out strong, we had done our communication, I even had it in writing for them, but ultimately, it didn't matter because it's up to the seller and if you know somebody comes at you three or $400,000 over the list price. You might just take that.
Dan Wurtele 33:55
Yep, exactly. So there's there's one more sort of tactic that we use that I want to share with everybody because it's not that common, but it's certainly works and it's an interesting one and and that is making the deposit that you have in your hand, instead of making it payable to the your brokerage or sorry, to your agents brokerage to hold in trust to go towards the purchase price when you complete, you make that deposit out to the seller directly and then of course, we can write in the contract to even further strengthen that tactic that it will be paid to them as liquidated damages, should the buyer not complete. So what does that mean? Well, normally, let's say if you've got a deposit and it's in the trust account of your agents brokerage and something happens and you cannot complete on the home, well those funds essentially gets sent to the council it can go to court to can take time and money to settle where those funds actually are distributed. This option essentially says look, should the buyer not be able to complete the seller keeps those funds no questions asked no court dates, no other issues there. It's risky. Yes. But again, given two identical offers, for example, should that be in there and in one offer and not in the other, and you have complete confidence in closing that could ultimately get you the home,
Ryan Dash 35:17
I would say to you see this with more savvy buyers for sure people who have likely bought property before, because they know they want that property and if they know they want that property, or that's an important investment for them, it doesn't really matter if the money gets held in trust, or if it goes straight to the seller, because ultimately, at the end of the day, they're looking to get the deal done, and they're not looking to walk from this property. So if that is in fact the case, and you really want to impress the seller, this is a really good tactic. Mm hmm.
Dan Wurtele 35:47
Yeah. So there you go. That's I think 12 very powerful tactics that can be used anywhere from one to all 12 of them when making an offer in a multiple offer scenario. But there's something else that we really need to touch on again. It's incredibly vital in in any industry, but especially this one, and that is relationships with the other agents.
Ryan Dash 36:09
Yeah, they're huge. Having a relationship with the selling realtor, a working relationship that is is is really, really important. I've had a couple deals this year come together because of those relationships. In one instance, I was competing against nine other buyers over a one bedroom downtown and I can't emphasize enough the importance of knowing the seller, the selling agent and having worked with them before it made a world of a difference. It gave us an ability to become very, very competitive right away. That's because the agent knows that the majority of the deals we get involved in we complete so the risk level for the seller is much lower and so much as that they can go in and take on a serious, serious buyer, knowing the relationship that the realtor has with their agent is true. It's tremendous value. It gives you an incredible advantage. So making sure that you're working with an agent who is well connected, who is well known in the industry, and who gets a lot of deals done in the multiple offer situations is vital. When it comes down to offer day,
Dan Wurtele 37:31
yep. Another another example. Recently a full duplex came up for sale, you know, this price over $3 million, and it's still got five offers on it. I was involved I was one of the top two offers, but we were not the top but the I knew the the listing agents very well and they were giving me some great Intel into how to make this happen and the reason they were doing that is because the other and the leading offer was with an agent that let's just they're being very pushy, and just less professional and, you know, this was making its way of course to the seller. He didn't like how they were representing themselves in the offer and, and over the phone and whatnot and ultimately said, look, I want this deal to be smooth and work with someone who you know, has a great track record of getting things done and doing it professionally. So in that case, we won again, you know, it was not the highest price, but it was based on relationships and a smooth deal.
Ryan Dash 38:25
It it like, Dan and I have been on both sides of this quite a lot and when you see the way an agent consistently carries themselves deal through deal through deal that you've dealt with them before, and being able to go back to your client and say, hey, look like I know, we've got two very close offers here. You know, we're splitting hairs in terms of which one to choose. But I've worked with this agent, you know, on three other deals and every single time it's come together, it's indicative of how that deal is going to go and ultimately, again, you know, we're looking for certainty, a seller, that is the seller is looking for a certain deal, right? and that's just another way to provide an inch closer to that certainty.
Dan Wurtele 39:13
Exactly. So all very important things here. I think we've outlined great ways for you to understand how to win that perfect home in a multiple offer scenario and there's one more strategy to touch on and you may have heard of that one. It's called a bully offer. Yeah and, Ryan, I know you've had very recent experience with that. Well, you outline what it is and how it's implemented.
Ryan Dash 39:35
yeah, bully offer is it's aggressive and it doesn't necessarily play by the rules laid out by the seller. So a couple of things. When you're dealing with a bully offer when you're presenting one. You don't. You don't want to push the seller around too much because the seller has the asset right. So once you've gone through the Discovery, the deal discovery part with the other agent and we found out that there's a potential for a deal here, but you don't want to wait until Tuesday to write that offer because your client wants it now, then you would employ the bully offer tactic.
Dan Wurtele 40:13
Yeah, let's just make it clear that, you know, the seller has indicated that yes, I only want to look at offers on again, let's say the following Monday at 6pm, but your buyer wants it so bad. They say, look, we're going to come together with a potentially incredibly strong offer, and we need you to present it prior to that date. How do we make that happen?
Ryan Dash 40:31
That's right. So let's say you know, the property was listed Thursday, we're in there on Saturday, taking a look at it and then afterwards, we walk outside client says, Hey, I want to write an offer on it. I go great. You know, we'll prepare for Tuesday. No, no, I want to write it now because I want to avoid trying to compete. That's really the whole purpose here is they don't want to get bid up. So they're happy usually to pay the list price, or in all honesty, they might be happy to work out a price with the seller. So the way we went about it in this instance, was afterwards after we had seen it, and we had a chat about it, and we were ready to make an offer on it. I called the selling agent and said, look, you know, we don't want to compete on Tuesday. We're happy to write the offer now and a couple things, I think it really having known the agent prior to that allowed me to kind of make this situation happen too. But also by pushing a really clean contract with the numbers they were looking for the dates that made sense to them, and having that written and given to them right away. It It was sort of like, well, what else do you want? And what happens in that instance, then is the seller and the selling agent, they have to then call back, everybody who's come to that property that's shown some interest in it, and they have to acknowledge and tell them that they are receiving an offer. You see a bully offer. By law, if I write an offer on a property, and an agent tells me well, we're not looking at it until Tuesday. It's still by law, he has to take that offer to his seller. So I can force the law as opposed to the process in order to get that number in front of the seller, and the seller once they see that number, once they see the conditions, despite having said I don't want to see it until Tuesday, but then they understand there's $100,000 that might make their way into into a bank account tomorrow. It might change their mind.
Dan Wurtele 42:33
Yeah, ultimately, it's the sellers home and they can choose what they want to do with it. But again, there is a legal process involved and that's just it and it can be employed tactfully. You know, they do still give of course, every interested buyer an equal chance and let's be honest, there's nothing stopping those other agents from coming forward with an offer there that night as well. Right, you're not blocking out other offers, you could ultimately put in a bully and suddenly be in multiples again, but just understand You know the tactics of why you would try and put in a bully offer. On the flip side of that, you also show your hand, right you can the the seller can flat out rejected say, Great. Thanks for letting me know, or seeing your cards.
Ryan Dash 43:12
Make it again on Tuesday.
Dan Wurtele 43:13
That's just it. You know, we're not looking at any others until Tuesday. So recognize that exists as a way that things can play out as well.
Ryan Dash 43:21
Yeah, absolutely. Yeah, I mean, that that kind of covers the bully offer for sure. I wouldn't be surprised if we start seeing a lot more of that coming in. Maybe not near future but in the future.
Dan Wurtele 43:35
Yeah, there you go. That is how we employ tactics to get you into your dream home when looking in a multiple offer scenario. So thank you again, so much for listening and we hope to hear you in the next one.
Ryan Dash 43:48
That wraps up this edition of the Vancouver life podcast.
Dan Wurtele 43:53
For more information on this podcast and to access a ton of free downloads, investment opportunities and current marketing and homes for sale. You can find it all at www.thevancouverlife.com
Ryan Dash 44:08
thanks and we look forward to bringing you more podcasts about Vancouver real estate.