Sellers can lose a bidding war, too. Here's how it happens.
Imagine that you've listed your house with a well regarded, highly experienced Realtor. He's priced it right, the property is staged, the listing photography is perfect.
The first weekend your house is on the market, you get a ton of showings. Your agent calls to let you know the good news. Multiple offers are coming in.
Sounds good, right? Here's where it goes wrong.
A week after you go under contract, the buyer you chose gets cold feet. Perhaps in the frenzy of multiple offers, they felt they overbid. Perhaps a better house came on the market. Maybe they realized that Boulder construction regulations would add far more cost than anticipated to their project. They're bailing.
Sellers - Listen Up
When a property goes under contract and later returns to market, it's tainted. Instead of feeling a sense of scarcity, potential buyers want to know what's wrong with it. All they know is that your property was under contract and for some reason the buyer backed out. It's now a fact and it's easily discovered by a savvy buyer's agent.
As part of due diligence, previous inspections must be made available to future buyers on request and believe me, I'm going to request it. Sellers can't hide from the market history of their property.
Bidding wars are great for a seller but they also create a problem. The more pressure buyers feel to make an offer quickly, the more likely they will back out of the deal. The contract in Colorado rightfully gives buyers a lot of protection and this is why it's so important to give buyers time to make an educated decision.
When I'm the listing agent dealing with multiple offers, I allow ample time for all offers to be submitted. If showings start on Saturday, we're going to wait until at least Tuesday before accepting an offer. If they really want the house, give buyers time to make an educated decision. They can wait. As a seller, you've got a lot at risk - particularly lost time on market.
The Buy Side
Smart buyers carefully evaluate pricing information. They look at the recent sales history (comps) in the neighborhood, pricing trend, and the value of improvements. The role of a good buyers agent is guide them through this process and towards writing an offer that makes sense. Sometimes it means going over asking or writing aggressive contingencies into the contract to make an offer more attractive. Sometimes it means encouraging buyers to walk away.
I was talking to one of my buyers on the phone yesterday. He attended an open house in Boulder over the weekend and was shocked to learn (directly from the seller) that multiple offers were already on the table. The seller proudly informed my buyer that they would be accepting an offer at 7pm that evening. Meanwhile, one of the buyers who had submitted an offer was hanging out in the backyard.
No, I'm not kidding. It's 1pm on a Sunday and the seller will make a decision by 7pm. Imagine the pressure buyers are under! Meanwhile, a buyer was stalking the backyard.
Perhaps the seller was thinking that this would encourage my buyer to enter the bidding war. Unknowingly, they increased the likelihood of the buyer flaking out. If that happens, and yes it does happen (look at the images in this post), the seller loses valuable time on market and taints the listing.
Lather, rinse, repeat.