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Bidding War! Part 4 – LMOTT

I mentioned the cash offer we made on Saturday on behalf of buyers hoping to purchase a home in Carlsbad. It finally came to a conclusion last night.

It went the same way all of the other multiple-offer situations have gone:

  • It dragged on for days.
  • Little or no communication.
  • No transparency about the process or how a buyer will be selected.
  • No open bidding.

After a day of being kept in the dark, I suggested to my buyers that we should improve our offer and just hope for the best. We submitted a new offer above the list price, 14-day closing, and free 30-day rentback. A worthy offer!

I got the call late yesterday – Sorry, we’ve gone in a different direction.

I appreciated the call because they usually come by text so the listing agent doesn’t have to offer any explanations. Because I had the agent on the phone, I pleaded with him to give me the winning sales price, which he did.

When I told my buyer about the winning bid, he said,

“I would have paid that.”

“IN FACT, I WOULD HAVE PAID MORE THAN THAT.”

It’s not just about treating all buyers and buyer-agents fairly (part of the Code of Ethics).

It’s about LEAVING MONEY ON THE TABLE, which is happening everywhere because listing agents are too lazy or inexperienced to conduct a proper bidding war. Even if you don’t have the guts to do open bidding like I do, then at least give every buyer a chance to make their highest-and-best offer, which used to be the standard up until this year.

Now, the listing agents only worry about grabbing their favorite offer, and going back to sleep.

Frenzy Season, 2022

The NFL added a 17th game this year, and pushed back the Super Bowl to the second weekend of February.

It will be about as long as buyers can wait, and the following weekend should be gang-busters.

If you’re not putting your home on the market in the next 2-3 weeks, then February 19th would be a good target date for listing your home for sale.

“Oh Jim, wouldn’t it be smarter to wait until momentum builds with other comps closing escrow, and then sell in April/May and pick up an extra 5%?”

Sure, if you’re a gambler.

What could go wrong:

  • A couple of neighborhood fixers sell for less.
  • Another sells to an ibuyer based on those prices.
  • Another is getting divorced and quick-sells their house based on those new comps.

If you get submarined by other sales nearby, then you’ll just be happy to get what you could have gotten in February. The worst part will be your spouse telling you repeatedly, “I told you we should have sold sooner”.

Yes, the frenzy will last into 2022, and you will sell for a ton of money no matter what. But I’ve gotten more inquiries this month about selling a home than any month this year – people are preparing to go!

Zestimate Manipulation

Zillow did get around to updating their Estimated market value after a few days. They kicked up the zestimate by $633,200 to get within 0.18% of the list price – and they are still wrong!

It is incredible how much faith and confidence the consumers put in their zestimate’s accuracy. But after years of being the source for the one-click home valuations – and consistent re-marketing by email – people believe it.

Zillow says their zestimate is within 1.9% of being right on price with the on-market homes, which sounds really good until you realize what that means – they just change the zestimate once a home gets listed…..and they brag about that? They hope you don’t notice.

From last week:

San Diego Case-Shiller Index, August

Lower volume could keep the index elevated. We had 382 sales last October, and today we’re at 189 for the month with four days to go plus late-reporters. We should end up with about the same as in 2019 (240).

San Diego Non-Seasonally-Adjusted CSI changes

Observation Month
SD CSI
M-o-M chg
Y-o-Y chg
Jan ’20
264.04
+0.2%
+5.1%
Feb
265.34
+0.5%
+4.6%
Mar
269.63
+1.6%
+5.2%
Apr
272.48
+1.1%
+5.8%
May
273.51
+0.4%
+5.2%
Jun
274.91
+0.5%
+5.0%
Jul
278.00
+1.1%
+5.4%
Aug
283.06
+1.8%
+7.6%
Sep
288.11
+1.8%
+9.4%
Oct
292.85
+1.6%
+11.5%
Nov
295.64
+1.0%
+12.3%
Dec
297.52
+0.6%
+13.0%
Jan ’21
301.72
+1.4%
+14.3%
Feb
310.62
+2.9%
+17.1%
Mar
320.81
+3.3%
+19.1%
Apr
331.47
+3.3%
+21.6%
May
341.05
+2.9%
+24.7%
Jun
349.78
+2.6%
+27.2%
Jul
355.33
+1.6%
+27.8%
Aug
357.11
+0.5%
+26.2%

“Persistently strong demand among traditional homebuyers has been amplified by an increase in demand among investors this summer,” said Selma Hepp, deputy chief economist at CoreLogic. “While strong home price appreciation rates are narrowing the pool of buyers, particularly first-time buyers, the depth of the supply and demand imbalance and robust demand among higher-income earners will continue to push prices higher.”

Bidding War! Part 3 – Auction

You say ‘full transparency’ and blah, blah, Jim – what do you mean?  What happened? Give us the dets!!

We received two cash offers during the open house on Saturday, one from the first people who saw it on Friday, and the other from a buyer who attended the open house – which was a quick turnaround because I told her that we already had a cash offer.

Each buyer had their own agent, and the terms were similar.  It was going to come down to price.

They are called ‘bidding wars’ in this business, but the way the vast majority of agents handle them, it’s really just a collection of offers.  The listing agent might use a spreadsheet to organize them, but in the end, they are presented to the sellers who then just picks a winner – usually after the listing agent chimes in with their preference.

It’s not right that the listing agents get to play God and decide the outcome.  I want the market to decide it, because that’s what is fair to all buyers, all buyer-agents, and especially the sellers.

Plus, I don’t want to delay the outcome for hours or days and risk that the buyers might cool off – which is what usually happens as listing agents let days go by after their first offer is received, thinking it might get better, later.

I started my bidding war as soon as I got in my car to leave the open house.

I called the agent for the first buyer and told him he’d been outbid, THEN I TOLD HIM BY HOW MUCH, and asked if he wanted to go higher.

He called back in ten minutes with his new bid.

I went back to the agent for the second buyer and told her that SHE HAD BEEN OUTBID BY X AMOUNT, and asked if they wanted to improve their offer.

My slow-motion auction lasted until one of the buyers ran out of gas about 90 minutes later.

It worked great, and maybe even better than a live auction because bidders don’t feel rushed to make an instant decision.  They were able to confer with their agent and make a deliberate new bid.

Both buyers had a fair and clear chance to purchase the home, which is missing with the Offer Collection method. When listing agents just pick their favorite offer, instead of requesting higher bids, it leaves money on the table and it makes the remaining buyers wonder what happened – most of which would have made a better offer, if they were only given the chance.

Get Good Help!

 

Inventory Watch

Buyers are increasingly disinterested in the current inventory, and the lack of new listings is making it worse – which is tempting buyers to pack it in for the holidays.

There have only been 163 new NSDCC listings this month – last October we had 400.

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Bidding War! Part 2

The seller of our new listing in Encinitas Ranch has been discussing a move for six months.  He contributed his decision to sell now primarily to what he read here on the blog.

Specifically, that what appears to be a frenzy slowdown is NOT reflective of the market normalizing – instead, it’s due to just the opposite; a continuing decline of inventory.

What’s my #1 tip for sellers? Sell when everyone else isn’t!

The Encinitas market is starved for higher-end luxury homes, especially those sexy, turn-key ready homes that can be occupied within 30 days (a dearth made worse by most listing agents demanding 60-days free rent after closing for their sellers).

We thought if we went on the market in October and appeal to the buyers who wanted to close and occupy by Thanksgiving, we’d have a special niche all to ourselves.

But we had work to do to maximize the appeal, so we spent the last two months and $50,000 to get the home in tip-top condition. By yesterday, it was perfect – thank you Donna!

What happened next wasn’t luck or happenstance.

It was a planned strategy to maximize the opportunity for buyers to not only purchase a home yesterday, but to also have the process be a fair and clear competition utilizing full transparency. I made sure that everyone knew the rules of engagement, and how to win.

Today, I get to go back in the jungle.

We made a cash offer with different clients yesterday who are hoping to buy a home in Carlsbad, and got the usual routine. Agent doesn’t answer his phone, doesn’t call back, doesn’t acknowledge receipt of the offer until today and leaves a cryptic email suggesting that he might have multiple offers but no other game plan on how the winner will be determined. You know, the normal way agents handle their business.

Full transparency is the best way to achieve top dollar, and you can only find it here!

New Listing Update

Our new listing has been on the MLS for 24 hours, and the Zillow views and saves are solid. With people using Zillow for their house porn, you can’t put too much stock into the views – but the saves should be those who have more than a casual interest, hopefully!

The zestimate hasn’t changed yet, but Redfin bumped their estimate by $488,339 from the previous day:

Wednesday, October 20:

Thursday, October 21st:

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