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Category Archive: ‘Bidding Wars’

Frenzy Fever

As the national drought in home supply dragged into its 21st straight month, competition among buyers drove prices up once again.

And the fiercest competition was in the Bay Area.

A new report from Redfin shows that 73.7 percent of homes sold above the listing price in the San Jose metropolitan area in June. That was the highest percentage in the nation, followed by the San Francisco metropolitan area (70.6 percent, second highest in the U.S.) and the Oakland metropolitan area (69.8 percent, third highest). They were followed by Seattle (62.3 percent) and Tacoma, Wash., (52.6 percent).

“Every record in market speed and competition that was set in May was broken again in June,” the report stated.

The Redfin report comes two days after the Mercury News reported on a rash of over-asking home sales in Sunnyvale and Cupertino. In the last month, more than 50 homes in those two cities sold for at least $200,000 over the asking price. One modest Cupertino house — 1,046 square feet — sold for $660,000 above its listing price.

According to Redfin, San Jose had the nation’s largest decrease in housing inventory, falling 42.2 percent in June from one year earlier. The second largest year-over-year contraction of the home supply was in Rochester, N.Y., where inventory fell 29.7 percent. The third largest shrinkage happened in San Francisco, where inventory fell 26.6 percent.

Read full article here:

http://www.mercurynews.com/2017/07/13/new-report-bay-areas-rocketing-real-estate-market-leads-nation-in-over-asking-sales/

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Posted by on Jul 13, 2017 in Bidding Wars, Frenzy, Jim's Take on the Market, Sales and Price Check | 0 comments

Price Coaching

A friend is trying to buy a house on the east coast, and finds himself in…..guess what…..another bidding war.

He was hoping the listing agent would give him some help.

He asked, “What will it take to win?”, which is a logical question. But of course, the agent told him that she couldn’t answer that question, and for him to make his best offer and let the chips fall where they may.  We’ll call that blind bidding.

But isn’t it in the seller’s best interest to administer the most effective process in order to achieve a top-dollar sale?  If buyers have a price to shoot at, or some pricing hints, it is more likely they will respond favorably.

An open auction is the ideal solution.  The competing bids are out in the open, and animal spirits take over.  The environment changes from buyers wanting to pay their price, to doing whatever it takes to win the contest.

We have a long ways to go before open auctions become routine.  In the meantime, listing agents can be transparent and help both buyers and sellers.

But agents are only familiar with blind bidding, and just hold out hope that a buyer might go crazy and submit a bid way over the list price – which could happen if the property was deliberately under-priced.  But the vast majority of properties are priced at retail – on those, there are multiple offers submitted due to the lack of other quality choices, not because the price is too low.

With blind bidding, offerors will only bid a little higher and hope to keep the purchase price in line with comps.  If they don’t know what the other offers are, and are bidding blindly, it is natural for them to be conservative – especially when you consider we are probably in the later stages of our bull market. Buyers are miffed at the lack of transparency, and only add a little extra mustard to their original offer.

As a result, with blind bidding, sellers are leaving money on the table.

Why do we allow this?  It’s because it’s the way we have always done it.

Listing agents should provide transparency to buyers, and let the animal spirits take over.  Buyers would appreciate the candor, and bid with abandon to win the property.

It’s an old wives’ tale that we aren’t allowed to share the other offers with every buyer. But I challenge anyone to show us where it says that sharing offers is forbidden.

This is at the bottom of our required Form PRBS:

We disclose to every buyer that their offer may not be confidential, and they agree.  Why, then, do agents insist that they can’t share the information?

It’s because they aren’t comfortable with conducting a slow-motion auction.

They’ve never done it before, they’ve never heard of it, and it is too easy to just take a blind bid that might be slightly over their list price.  That’s good enough, isn’t it?

No, it’s not.

Of course the sellers deserve top dollar, yet we refuse to employ the best strategy to achieve it. Don’t get me started on how many properties we see that are “Sold Before Processing”, where the listing agent tilts the table to avoid any bidding war.

But it is also not fair to the buyers.

How many buyers have you heard say, “I would have paid that much”, after a sale closes.    Both sellers AND buyers deserve better…..but are agents going to put in the extra effort?

Get Good Help!

Posted by on Jun 13, 2017 in Bidding Wars, Jim's Take on the Market, Listing Agent Practices, Realtor | 3 comments

SW Carlsbad

My buyers offered full price for this house on the first day, and we were fifth out of five offers. One buyer included the escalation clause, which meant he was willing to pay $1,000 over the highest bid.

It’s not a great way to determine the winner if you look at it logically – wouldn’t any buyer pay $1,000 over?  Instead, the sellers decided to sign a $1,230,000 offer the first night, which was literally $51,000 over list price.

These sold in the high-$400,000s when new in 1998.

Posted by on May 30, 2017 in Bidding Wars, Bubbleinfo TV, Carlsbad | 11 comments

“You Do Whatever It Takes”

It’s one thing to offer above the list price, but would you waive all contingencies too? 

I think a judge would be reluctant to have a buyer lose a deposit.  Listing agents who might keep a deposit should do a pre-listing home inspection, and give a copy to anyone making an offer with no contingencies, just in case.

LINK

Homes are selling fast in Seattle, spending about 25 days on the market, down from 65 in March 2012. It can be hard to find parking at open houses and some are so crowded that it’s hard to move around to see the home.

Sellers are seeing some of the biggest price gains in almost a decade, and they know they’re in the driver’s seat.

“You put a house on the market you will have 100 people through the open house on the weekend and maybe 15-20 offers,” said Patti Hill, a real estate agent who has worked in the Seattle market for more than 17 years.

To win a home, buyers are putting in aggressive offers.

“Some of them are kind of scary because they’re waiving contingencies that puts earnest money in jeopardy if something happens,” said Hill. It’s common for Seattle buyers to waive inspections and appraisals and go above list price.

When Harris and his partner found their soon-to-be new home, they did everything they could to come up with the winning bid. They waived all contingencies, went above the asking price and had an escalation clause.

“Buyers are totally at the mercy of whatever the sellers wants,” he said. “If you want the house, you do whatever it takes.”

The pair also talked to the listing agent to find out about any special circumstances about the owner and incorporated that into a personalized letter and also offered a 30-day rent-back-to-owner for free.

Their winning bid was $425,000 — $60,000 over the asking price and above their original budget.

Posted by on May 11, 2017 in Bidding Wars, Frenzy, Jim's Take on the Market | 2 comments

Contest for 4 Padres Tickets

Let’s have a contest for Padres tickets!

Guess the sales price of Matt Kemp’s house being auctioned April 20th with no reserve!  He paid $9,075,000 in 2013, and it has been listed for $11,500,000.

The person with the closest guess will receive 4 tickets to a Padres game!

From the latimes.com:

“[The auction] is going to be a better route for bringing legitimate interest to the property,” said Nartey, the director of sports entertainment division at Compass. “It’s an opportunity for someone to get an asset for less than its actually worth.”

The “asset” in question includes a 15,884-square-foot main house, a tennis court and an infinity-edge swimming pool on about 4 acres of grounds. A separate pool/guest house holds a gym and a roman spa.

Features of the home, which Kemp has spent about $3 million to update, include custom travertine floors, a cigar lounge with a humidor and a 1,200-bottle wine cellar with a tasting room. A custom home theater is outfitted with tiered seating and a snack bar.

Here is the Zillow listing:

https://www.zillow.com/homedetails/14105-Biscayne-Pl-Poway-CA-92064/38433937_zpid/

Here it is on the auction website:

https://www.conciergeauctions.com/auctions/14105-biscayne-place-poway-ca

Leave your guess in the comments section!

The Trophy at The Heritage | Concierge Auctions

Posted by on Mar 27, 2017 in Auctions, Bidding Wars, Contests, Jim's Take on the Market | 43 comments

NSDCC New Listings, Jan-Feb

Our local home prices are in record territory – won’t that draw out more home sellers?  Greed is good!

But lo and behold, so far we’ve had fewer new listings!

NSDCC New Listings, Jan-Feb

Year
Number of New Listings
Median List Price
2013
785
$1,130,000
2014
802
$1,295,000
2015
799
$1,350,000
2016
879
$1,494,165
2017
746
$1,549,949

The median list price has gone up 37% since 2013, yet fewer people are listing their home for sale!

It’s enough to drive buyers crazy, especially when you see homes flying off the market that were listed at prices you thought were too optimistic.

Buyers – don’t panic, relief is on the way.  Last year, we listed 516 houses for sale in March, so we should see a steady flow of new offerings this month.

If you are looking at homes under $1,500,000, expect competition.  You might lose a few before you land one!

Get Good Help!

Posted by on Mar 7, 2017 in Bidding Wars | 1 comment

Traffic Doesn’t Equal Offers

By now, the low-inventory/fast-market has trained the motivated buyers to be on red alert.  If a new listing pops up that looks remotely interesting, those buyers know to get over there quick for a peek.

This presents a major problem for the sellers and listing agent.

Once the parade of lookers descends upon the new meat within hours, it is irresistible for the ego to go wild, and it causes sellers and listing agents to have visions of lottery-type money.

It is so much fun, they want it to last forever! They are so excited!

Savvy buyers know that if this is THE house, they need to make an offer promptly.  It makes the equation quite simple – sellers will receive offers from the motivated buyers within the first 2-3 days.  All you have to do is counter for every buyer’s highest-and-best offer, and by Day Four the buyer who will pay the most will emerge.

But what usually happens?

The overly optimistic buyer-agents get all giddy and tell the listing agent that they think they will be making an offer.  But a funny thing happens to buyers once they roll down the street for a couple of blocks – all the reasons NOT to buy that house come up, and most buyers talk themselves right out of it.  At least half of the people who threaten to make an offer never do.

What if you are a motivated buyer, and make a great offer in the first 1-2 days?  It happens regularly that sellers and listing agents will pooh-pooh a great early offer, and hope that there are two in the bush.

What can buyers do?  You only have one option, and that is to walk away if you don’t get a response by the time the offer expires.  At least if you threaten to quit, it should hopefully get their full attention.

Sellers and listing agents think that lots of visitors = lots of offers.  But most visitors don’t offer – they’re just visiting.  In virtually every case, the no-offer rate is at least 90%, but sellers ignore that and are convinced there has to be two or more in the bush.

Here’s today’s example:

The seller paid in the low $700,000s in late-2012, and didn’t add anything but lipstick since. We initially offered $1,275,000 last week, and sure got the feeling that we were getting shopped around – the listing agent kept reminding me that there were other offers expected.  So we put a deadline of 1:00pm today to accept our $1,300,000 counter-offer.  Two hours after our deadline, the seller countered $1,339,000, which was just $6,000 under their first counter.  They called it their final offer, and it wasn’t a multiple-counter, so no other offers were on the table.

The sellers paid low-$700,000s, and couldn’t live with $1,300,000 – they had to have an extra $39,000, or the deal was off.

My buyers stuck to their guns, and instead we were off to a new listing that was priced well under this one.

Get Good Help!

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Posted by on Jan 16, 2017 in Bidding Wars, Jim's Take on the Market, Market Buzz, Thinking of Buying?, Thinking of Selling?, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 2 comments

Bidding-War Report

2016-11-09-12-20-55

We received 16 written offers on the Bluff Ct. property – here are notes:

Five agents were from the LA/OC area.  Because their MLS (CRMLS) covers most of the rest of Southern California, they were used to traveling to sell a house.  San Diego home sellers want these LA/OC buyers to come here, because our prices look cheap to them.

The first three offers were all below list price. When it came time for the highest-and-best round, all three withdrew.  I would have thought that the first offers submitted would be from the most motivated buyers?

The average down payment was 33%.  There was one cash offer, and four that had less than a 20% down payment.

Five of the financed offers didn’t include a pre-qual letter.

Five buyers increased their offer during the highest-and-best round, by an average of $21,000.

List price was $749,000 – three H&B offers came in at $799,000 and higher.

My youtube video of the home’s defects is up to 335 views!

Posted by on Nov 10, 2016 in Bidding Wars, Frenzy, Jim's Take on the Market, Why You Should List With Jim | 1 comment

Buy/Sell Now or Later?

median cost per sf

What now?

Summer is over, and the so-called spring selling season is six months away.

Is it worth waiting?

Sellers want to believe that springtime is when all the young families with 2.2 kids will be looking to pay retail-plus.  But that belief ignores the trend – prices been fairly flat around higher-end areas.  Look at the graph above.  The only area that is a good bit higher today than in January is Rancho Santa Fe, which has been on a roller-coaster the last couple of years.

Predictions for next year?  From Zillow:

Zillow SD prediction 2017

Zillow was more pessimistic about 2016 too, so the +1.7% may end up being conservative.  But prices are already setting all-time records, so it is hard to imagine another big pop next year.

We as an industry aren’t used to flat pricing – the drama of violent price swings is much more exciting!  But flat pricing does make it easier, because it eliminates one of the major variables about moving.

If you are going to sell or buy at roughly the same price now or next spring, then which is better?

THE BEST TIME TO BUY OR SELL IS WHEN NOBODY ELSE IS!

If you are buying and come across the right home at the right price, you sure don’t want any competition to screw it up for you!  There will be less competition during the next 4-5 months!

If you are selling in a flat market and have other active listings around you, what if one of them needs to sell worse than you do?  They could undercut your spring-selling-season-2.2-kids-retail-plus program, and leave you hanging.

Remember our Glendale realtor with the line out front?

glendale

There weren’t any good comps nearby all year – a great time to sell when nobody else is!  They ended up with 18 offers (6 were cash) and they had two cash buyers who wanted it so bad that they were willing to pay more than $100,000 over list price!

Thankfully there weren’t any good comps nearby to screw that up!

 

Posted by on Sep 6, 2016 in Bidding Wars, Forecasts, Jim's Take on the Market, North County Coastal, Sales and Price Check | 0 comments