Market condition right now.

As you might have noticed or maybe not, it is NOT a buyer’s market anymore, at least for properties below $400,000. I will say it is more or less the contrary. Inventory is extremely low and there are multiple offers on nearly all listings. Even short sales are getting offers the first day they are on the market, and those short sales can take a lot of time to get and it is still not sure that the banks will accept your offer.

There are a lot of buyers out there, mostly investors and first home time buyers. Investors come with cash offers and they are difficult to fight against, especially with first home time buyers with a FHA loan. Investors will go after the REOs, as they are easy for them to get. They will get an answer within a few days.

You can buy a property with a FHA loan with as little as 3-1/2 pct. down but it is a weak loan compared with cash buyers or buyers with a conventional loan with 20% down. And there will be a limit how much a buyer with a FHA loan can offer on a property. The appraisal has to come in or the loan will never been given (this is why some properties come back on the market).

A seller will always prefer to have buyers with a big downpayment as the deal might be easier to get through (easier to get the loan) The inventory consists of mostly short sales, which are in my opinion about 85%. The rest are REOs (bank owned properties) and a few normal sales. This is at least for properties under $400000.

Buyers can give offers on many short sales at the same time as it will take a long time to get an answer of whether or not their offer has been accepted. This will give them a better chance to purchase a property but at the same time it will give a wrong picture of the inventory.

Therefore, it is okay to give back up offers as you will not know if the "winning offer" will get the house in the end. The person with the winning offer may have decided not to wait for an answer and therefore purchased another house long before their offer was eventually accepted.