The days of wondering how much of a discount you could get off the list price have been replaced with hoping to limit how much OVER the list price you are willing to pay. For buyers, how much to pay is relative to how well the home fits all of your needs, and how much you love it.
Here’s a gauge of how to determine how much to offer:
For home you only like a lot, try to keep the premium-above-list to 5% or less.
The average winner pays 6% to 7% over the asking price.
The top-rated masterpieces are fetching 10% (or more) above list price!
Any decent property that’s fixed up and priced right should go pending in 7-10 days.
If you are a dare-devil, one strategy to consider is waiting a couple of weeks after a home is listed for sale. If it hasn’t gone pending, then the condition, price, or agent was a problem and by then, the herd has cleared out so you should have a little more negotiating power.
But if you think the new listing is a hot one, then you better get over there right away for a look.
Ask if the listing agent has a strategy for determining the winner. Most agents will spread the offers out on the coffee table, and let the sellers pick one. If that’s the case, the terms of price, down payment, waived contingencies, and escrow time will probably be what determines the winner – with influence from #2:
Any compliments you can bestow on the sellers and listing agent in person or with a love letter can go a long way. The love letters have come under scrutiny lately, and I totally agree that sellers and agents will discriminate consciously, or sub-consciously. Just use your first names and no photos.
Know what you are looking at, and don’t overpay for fixers. You may see crowds, but almost all buyers will pass on the fixers. If you aren’t that familiar with spotting needed repairs and identifying costs, then work with someone who is.
Waiving contingencies. It’s uncomfortable, but your competitors are doing it. All four of the Crater Rim buyers who were willing to pay $90,000+ over the list price waived their appraisal contingency.
If you know you are going to buy the house regardless, make your deposit non-refundable and release it to the sellers within seven days after acceptance.
Have your mortgage pre-approved by a well-known and respected lender who will call the listing agent to sell them on your qualifications. If there are cash offers, this is about your only hope to compete.
The listing agent has influence on the selection, and prefers a buyer’s agent they know and trust. The buyer’s agent is smart to provide their own qualifications that demonstrate they can close a deal.
If all else is equal, the homeowners want to sell to someone who will close on time with minimal problems. Someone who makes it easy. Somebody they like. Buyers are smart to make a lasting impression on the sellers or listing agent, because in a close race, how the sellers feel about the buyers will decide it.
A good friend works at Bandon Dunes and I’ve been there a couple of times. It takes all day to get there – fly to SFO then take a 30-seater planer to Bend and then drive two hours – but once you get there, you’re at the coast for a great price!
Most folks probably don’t imagine spending their beachy retirement huddled up under layers of sweaters and blankets, but they’re missing out. The cliff-edged and chilly shoreline of Bastendorff Beach, just a short trip over the bridge from Coos Bay, is gorgeous, a wholly relaxing place to collect shells, pitch a tent, or ride a horse.
Many locals also take whale watching tours by boat, view masterpieces at Coos Art Museum, swing a 9-iron, or watch the pros play golf at the Bandon Dunes Resort, home to the Curtis Cup. Homeowners can look at the bay from their two-bedroom bungalow for just $169,000 or smell the salt air in a grand four-bedroom Dutch Colonial in the heart of town for a cool $649,000.
The contest for guessing the number of listings in January is now closed. We are running about 20% behind last January’s count, so the few sellers who are willing to brave the early-2021 market will do nicely.
We had 31 showings and five offers on our new listing over the weekend, and three of them were willing to pay $90,000 over list!
If you are the kind of buyer who wants to use logic and common sense – and tie your offer price to the comps – well, this isn’t the market for you. Pay tomorrow’s prices, today!
The seven showings of our new listing yesterday went well. People generally show up on time and understand the predicament that the demand is overwhelming the supply. We’ve received two offers, and we are way over list price already.
There tends to be some standing around, so I like to engage with agents about how my slow-motion auction process works. They appreciate the transparency, and tells stories about how other agents are handling their showings. I heard a story about one listing agent who demands that agents submit the buyer’s preapproval letter and proof of funds JUST TO BE PUT ON A WAITING LIST TO SHOW, and another where no human interaction was allowed (which is common).
In my case, you deal with me, and I make myself available by phone, text, or email. I want to give every buyer ample opportunity to buy the home – isn’t that what you want in your listing agent?
Happy New Year…..how about a contest to get it started?
My case for a full-blown frenzy is based on having additional supply to fuel the seemingly-insatiable demand brought on by the pandemic – having more homes for sale will help spike sales and prices. Betting on more people selling their piece of paradise sounds insane as the coronavirus rages throughout the region, but we’re overdue – and there are a number of reasons why it could happen:
We will know how the selling season will unravel just by the number of new listings in January.
Here is the history:
NSDCC January Listings
Number of January Listings
The range is 275-471, the median is 412, and the average is 396 listings. Last year we had 5% fewer listings, but 13% more sales than in 2019. My 2021 prediction is 10% more NSDCC listings year-over-year, 10% more sales, and a 10% increase in the NSDCC median sales price.
OUR CONTEST: GUESS THE NUMBER OF NSDCC LISTINGS IN JANUARY, 2021!
In 2020, saw a big drop-off in January listings year-over-year (-16%), and that was before the pandemic. If we see a similar amount, or fewer, then prices will go nuts but be limited to the neighborhoods that actually have sales, and the lucky few who can win a bidding war.
If we have a surge in listings, then more of the demand will be satisfied and the frenzy will reach more areas – and prices go up faster because of the additional comps, all of which should close for a higher price than the last sale.
Having a contest based on the number of January listings will help to keep our focus on one of the leading indicators for the 2021 selling season.
The winner will be who guesses the closest (above or below) to the actual number of January listings as counted on the morning of February 15th. The winner will receive two tickets to a day at the U.S. Open at Torrey Pines, June 17-20, and four tickets to a game with World-Series favorite, the San Diego Padres!
I have purchased tickets to both events already, so as long as the ‘rona cooperates and fans are allowed, we will have prizes. Neither the PGA or the Padres have committed to a set policy on fans yet though, so if they both cancel out then I’ll think of something else for a prize.
Our Padres tickets aren’t front row, but they are decent:
Leave your guess in the the comment section on how many NSDCC SFR listings we’ll have in January!
We’ll be all frenzied up for the next few months – when will it cool off?
The real estate market will likely mirror the course of the pandemic.
You’ve probably heard the comparison to the Roaring 20s – the boom that kicked off when World War 1 and the Spanish Flu of 1918 were over and automobiles and telephones fueled the new economy. Just the relief of seeing the coronavirus beginning to clear should cause more people to get out and about….but getting back to normal could mean less real estate frenzy.
Mortgage rates will reflect the improvement, and rise accordingly.
Don’t expect rates to budge the moment he takes the oath of office, but a Biden administration could eventually impact the direction of mortgage rates.
“Expect tax rates to rise, the Fed to offset increasing inflation with higher rates, and the economy to slow,” Guy Baker, founder of Wealth Teams Alliance, tells The Mortgage Reports.
And there’s this, from Rick Sharga, executive vice president at RealtyTrac: “Biden has called for more government investment in affordable housing, which could be funded in part by proceeds from fees attached to home sales backed by government agencies like Fannie Mae, Freddie Mac, and the FHA.”
Baker, Sharga and other experts polled by The Mortgage Reports in October predicted 30-year rates would rise to an average 3.51% in 2021 under a Biden administration.
When home buyers hear that rates are going up, they will be tempted to hit the brakes and wait until sellers start lowering their prices to compensate. Think sellers will lower their prices? Me neither, and the market will probably stall out for months or years, much like it did after the Rocking 2013 Frenzy.
My guess is that we have six more months of frenzy in the bag.
But there will be enough other distractions that the super-hot market will fizzle out by July/August.
Or the first day that mortgage rates hit 3.50%, whichever comes first!
Would you move this year if you could figure out where to go?
The chart above helps identify the best values by cross-referencing income and costs. To no one’s surprise, living in San Diego comes with a hefty premium!
If getting more bang for your buck is important, then they suggest moving to Houston….with Dallas, Las Vegas, Austin and Charlotte also in that quadrant. Phoenix is a great place to retire, and if you don’t mind spending a little more money then Oregon, Washington, Denver, and Miami might be worth considering.
Do you have suggestions for places to move? 🙂
Here’s a brief look at small towns around Arizona:
We already know it’s going to be hot – look at the sales count for this month, plus we have 285 pendings:
NSDCC December Sales
The Following January Sales
We knew that 2020 was going to be better than usual just by the 185 sales in January. Then the pandemic derailed us for a couple of months, but we gained it all back in the second half of the year and 2020 wound up with the most annual NSDCC sales ever.
The drop-off from December to January a year ago was only 19%, so if we see about the same decline next month, we’ll know that the frenzy is continuing. We have 283 December sales this morning, and once we add today’s sales plus the late-reporters we’ll probably be around 310 sales for this month(!!!).
If next month’s sales end up around 251 or higher (310-19%), then we’ll know that the frenzy is continuing.
The last frenzy happened in 2013, and you can see how it continued into early 2014 with only a 17% drop off. But by the end of 2014, the frenzy was over – expect the current frenzy to die down by the end of 2021.
Gibson, Ford, Brock, Seaver, Kaline, Morgan, Niekro, Lasorda, Sutton and now Hammerin Hank. We’ve lost some of the greatest to ever do it this year. @TommyLasorda is gonna have a hell of a roster to manage up there. #RIPLegends
Comments on December Existing Home Sales https://www.calculatedriskblog.com/2021/01/comments-on-december-existing-home-sales.html The delay in the buying season has pushed the seasonally adjusted number to very high levels. For example, this number of sales, (NSA) in July, would have given a 5.3 million, as opposed to 6.76 million SAAR.
"Where do we begin..2020 has been a year for everyone. When COVID hit and shut down both my husband and my businesses, we were left with a mortgage and very little income coming in. We were stressed, scared and felt stuck. We made the hard decision to sell our home and move out of state. We contacted the Klinges' and spent a good hour going over what we hoped we could accomplish. Jim and Donna came over with comps in hand and suggestions on improvements to get our house ready for the market. It was overwhelming to think about, but Donna was there and one step ahead in every scenario. more "
"Jim and Donna Klinge made the sale of our condo extraordinarily easy. They know the market and gave us sound advice backed by details and very considerable experience, reflected both in the initial pricing and subsequent negotiations. They work together as a team and are always available to talk. more "
"I cannot believe there are no reviews of Donna yet, ugh!! She is the secret sauce of the Jim Klinge/Donna Klinge combo! I will touch on Jim here, but Donna is why I'm so totally loyal to these two (no offense to Jim :)).
I consider myself a rather savvy buyer/seller. I've bought/sold 7 times in more "
"Jim and Donna Klinge are by far the most professional, personable and responsive realtors I have ever worked with. They provide VIP concierge level service in every area of the process of selling your home. My home was marketed so successfully that we received an offer the day after our first and only open house. Thanks to Jim's pricing and negotiating, our house is now the highest sold in our community... more "
by Ann Romanello
"Jim educated us, helped us find the perfect house, and then negotiated us a great deal. I would hate to be sitting across the negotiating table from ... more "
"Jim is thorough and will be brutally honest about the homes he shows you. He provides great service and follows through until the very end and even ... more "
"I highly recommend Jim as a buyer’s agent. Working with Jim, we closed this week on a San Diego condo. Jim prepared a list of comparable sales to ... more "