What Is A ‘Presentation of Offers’?
If you’ve been keeping an eye on the market, you will certainly have heard things said about listings like, “it’s a presentation,” or “offers are being presented next week.” And your next question is, “what does that even mean”? Whether you’re a buyer or a seller (or both), it impacts you. So let’s dive in.
WHAT IT IS:
A formal process whereby the seller has chosen to ideally collect a series of offers on their home, which are to be presented all at once at a specific, publicly known time (for example, “Offers to be presented to seller at 6pm, Monday March 10.”) . Sellers will allow showings of their home from the time they hit the MLS up until the presentation, which is usually a period of a few days. During this time, the seller’s agent will collect any and all offers made on the home, and is legally prohibited to share any details of the offers with the seller until the exact presentation time. Once the presentation timeframe arrives, any offers will be shown to the seller and the seller is expected to choose the strongest one.
HOW DOES IT AFFECT SELLERS?
Ideally, the competitive nature of a presentation process will benefit sellers by having many serious buyers bring very strong offers - often far and above asking price. This can work great for types of homes that are in very high demand right now, as the pool of buyers is large and the supply is minimal. It does not work in some situations of very unique homes that would appeal to a smaller subsect, and absolutely does not work for homes that are priced too high - and sometimes, even priced right at market value. This can actually result in buyers not wanting to compete at all - read on to find out why.
HOW DOES IT AFFECT BUYERS?
The main perk for buyers in a presentation situation is that it protects a timeframe that allows buyers a chance to actually view a home before it is sold within a few hours of listing (which is an all too common occurrence in this market.) Having this timeframe also allows buyers to create careful, well-crafted offers that are not made in a time-crunch panic.
Other than this, buyers tend to not enjoy the presentation process too much, as they are required to put their very strongest offer forward in a single shot. Furthermore, this often includes offering over asking price (and estimating exactly how much begs another area of stress and confusion) in order to be competitive and successful.
While some buyers will will participate in a presentation scenario, others find it too stressful and disappointing, which can lead to many folks choosing not to visit a home or make an offer on it.
THIS IS HOW SELLERS GET A WIN WITH PRESENTATIONS:
The main point here is that if a seller is wanting a successful presentation, their home must be, a.) generic enough to be in high demand, and; b.) priced a little below market value.
Let’s pretend you have a house that is worth 550K in today’s market. Agents bringing in buyers will do the comparable research to see what price homes similar to yours are selling at, and they will know 550K is in the right ballpark. However, if they see your house listed at 550K AND you’re doing a presentation, they and their clients are already regarding your home as overpriced. People may think, “I would definitely pay 550(ish)K for that home, but I do not like it enough to throw 30K above asking price on it.” And now you’ve caused your buyer to think, “if I’m going to end up paying 580K for something, I’m going to go back to market to see what that price can get me without a competition scenario.” In this instance, you’re already discouraging traffic from your sale, and I have seen time and time again where sellers in these shoes end up getting far less viewings and no offers because no one wanted to bid that high.
Now, let’s pretend you list your house (which is valued at 550K) on the market for 530K, and do a presentation. People are initially attracted your house as it appears reasonably priced, and will feel excited to come view it. They will come to the viewing with lower mental objections, giving them a better shot at falling in love with your home. Knowing they will be competing, and knowing your house could easily sell at 550K, they are going to be more willing to offer 30K over asking. This is because 560K feels like a reasonable win for them on a 550K house - and as a seller, you end up taking 10K more than if you had just entered the market at 550K in the traditional (no presentation) way. Win win.
THIS IS HOW BUYERS WIN WITH PRESENTATIONS:
Although presentations can be disappointing and scary, there are a few tips that help big-time.
Keep your head on straight. It is easy to get caught up in the whirlwind of emotions, and the best decisions are rarely made when based on these emotions. Stay focused on your goal and your requirements of the home - this will help validate your decision to offer, as well as how much.
Have a realistic understanding of the market. Here’s the deal: it’s spring in the land of many buyers and few sellers. Prices are strong; this is not the time or environment for any deals to be had. You are going to need to come in competitively in 99% of the homes you offer on, even if it isn’t a presentation. Sellers don’t have to give large discounts in this market and they won’t.
Listen to your agent and ask question. Assuming you have a solid relationship with your agent built on trust and transparency (sidebar: find a new agent if you do not), you can know that they are sharing reliable stats as well as their back-pocket knowledge of the market with you. It is so important that your agent works in the market day-in and day-out, because that on-the-ground information is the inside scoop you need to gain an upper edge, and is essential to your confidence.
Find that magical number for your offer that is the dollar amount you will not feel disappointed if your offer is not accepted, as any higher than that would have had you feeling like you overpaid. This is a personal decision made using your head and your heart, and helps you feel hopeful and validated in your actions.
Know that if your offer is not accepted, this just was not the house meant for you. Yes this is annoying to hear but I promise, when the right one comes, you will know it and will forget all about whatever-it’s-address-was.
Have any more questions about presentations and this market? Reach out any time - I’m always happy to hear from you and love to share my market insights with you.
Happy housing,
Jenny