A Return to the Seller’s Market of Days Past

By
Real Estate Agent with Solutions Real Estate CalBRE Lic #01490977

I am finalizing an offer with some terrific out of town clients - first time buyers - who have been looking for some time. In their price range and area, almost everything for sale is an REO, a short sale or a pre-foreclosure. Many of them are pretty ugly and need a lot of work. Schools are important and must be factored in. 

We submitted an above-asking offer on a pre-approved short sale in nice shape (there were 6 offers when I called the agent, all above asking price) and got outbid. We have a pending offer on a short sale that has been sitting for 8 weeks now. No movement there...no surprise, and we are not in the top position. We have toured probably 30 homes and they are pretty anxious...and tired of the process.

On Saturday a new home hit the market. In the price range, with beautiful photos, in an area they like and IT'S A REAL SALE. Perhaps only one of a handful in the entire community, and it is in beautiful shape (truly MOVE IN). 

They drove into town (a significant drive, the second in 1 week), an offer was submitted, and it was off to the races. It is a return to the seller's market of days past - nothing like I have seen for some time. There are numerous offers (in the double digits as of yesterday per the agent as of last night), many of them over asking price, a real feeding frenzy.

Feeding frenzy at a home for sale

It is obvious that people: 

(1) recognize the value of a well-priced home in this market

(2) like seeing something that is in great shape as opposed to the distress sales and REOs; and

(3) are sending a message about their feelings about dealing with short sales and REOs, none of which in my area are getting this sort of crazed response. 

AND it also sends a signal that there ARE a good number of buyers out there, at least in the under $400K range, that are ready to pounce on the right opportunity. The agent was pleased, but overwhelmed with the volume and the variety of offer terms and conditions. And in this case the seller is truly in the driver's seat. 

What is REALLY fantastic is it looks like we are the party getting a counter offer based on terms my clients are already agreeable to per discussion today. We'll know tonight. If it goes our way, it is not simply about price since there are other higher offers. Watever the outcome, is has been a wild ride already.

What WILL the answer be to our offer?The whole psychology of making an offer in this situation, knowing that there will be multiple bidders immediately, is a challenge, as are the practical issues:

  • How quickly to respond
  • How much to offer
  • Whether to provide an offer expiration time or not
  • How quickly to propose closing
  • How aggressive to be on contingency removal dates  

Buyers worry about being TOO interested but don't want to lose the house to someone else. And wonder if the sellers will counter everyone, looking for best and highest, or just selected folks?

And what about the appraisal, an issue in this market with the large number of homes selling that are REOs and short sales: what if it falls short? 

An opportunity like this, in our market, requires us to switch gears, and our thinking about how to proceed. The counsel we provide to our clients, and the offer strategy we help them develop, must be different from the typical sale where we are the only offeror, or in the case of short sales, pre-foreclosures, and REOs, themselves a unique animal as far as offers go. 

It is, indeed, further evidence that this is a complex market, not easily described nor consistent from area to area, or even within a given locale. The media have no clue.

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Ambassador
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Sheldon Neal
Bergen County, NJ - RE/MAX Real Estate Limited - Maywood, NJ
That British Agent Bergen County NJ

Hi Jeff !

The last 3 offers I submitted for my buyers (3 in the last 2 weeks :o) ... but all 3 had at least one other offer !!!! one had 4 offers !!!!

... oh and did I mention I got my clients the accepted deals in all 3 cases

So I'm seeing the same as you Jeff - and I'm pretty darn excited about

Apr 14, 2009 10:27 PM #1
Rainmaker
536,364
Lynda Eisenmann
Preferred Home Brokers - Brea, CA
Broker-Owner,CRS,CDPE,GRI,SRES, Brea,CA, Orange Co

Hi Jeff,

Interesting market out there. All the more reason to work with a REALTOR who's knowledgeable and competent in the specifics of repos and short sales when it comes to making an offer.

We too are seeing this type of activity. Last offer written 5 days ago (new on the market) was also over asking along with 4 others. Had a smilar happening the prior week.

Apr 14, 2009 11:00 PM #2
Rainmaker
343,178
Jenny Kotulak
RE/MAX Real Estate Centre Inc., Brokerage - Oakville, ON
Broker - Oakville Ontario Real Estate

That is great to see.  I'm so happy we don't have to deal with Short Sales here.  We have some "Power of Sales" which are similar to your Foreclosures.  Buyers think they will get a "steal" on these homes.  They may get a "deal" but there is no such thing as a steal.

I find that banks are difficult to deal with and they have no sense of urgency.  Selling a home that is well taken care of by house proud owners is the best!!!

Apr 14, 2009 11:04 PM #3
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William Johnson
RE/MAX Associates - San Diego, CA
San Diego Real Estate Voice, GRI CRS e-Pro CDPE

Hi Jeff, Congratulations and I hope it all works for your Buyers. Your last point was particularly hard hitting to me today with 2 transactions in the same day that probably can not proceed through escrow based on the appraisal. One had multiple offers and the original offering price was not ever the issue. It fell short in appraisal by a margin almost 10% of the offering price. It's brutal out there.

Apr 14, 2009 11:18 PM #4
Rainer
89,191
Randy Hooker
Dreamcatcher Realty / Greater Phoenix Area - Gilbert, AZ
Gilbert, Chandler, Mesa, Queen Creek

Right you are, Jeff!  My latest offer on an REO attracted a whopping 22 offers in 3 days!!  Some folks (agents AND buyers) are still trying to figure out the market change, while my clients and I are strategizing on how we can be quicker and better than the others.  Very nice, up-to-date post!

Apr 14, 2009 11:36 PM #5
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages Connecticut - Middletown, CT
Your Connecticut Mortgage Expert

Jeff, I have been seeing multiple offers on properties around here as well.  The problem in going over the asking price in this market is, will it appraise.  Appraisers are still looking at things as if the prices are going down and not up, so that makes offers over the asking price a little risky.

Apr 15, 2009 11:43 AM #6
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Jeff Dowler CRS
Solutions Real Estate - Carlsbad, CA
Carlsbad CA Homes for Sale (760) 840-1360

Thanks for the comments. Sounds like we are seeing atrend in a number of areas. I. for one, am glad.

BTW my buyers DID get the nod. Signed off on counter late last night with Docusign, depost wired today, they are here Saturday for the inspection and we close in 30 days. We'll see what the appraisal says. None of the homes that are comps even compare to this one in amenities, conditiion, etc. But that may not matter.

Jeff

Apr 15, 2009 11:21 PM #7
Rainmaker
605,794
Sharon Simms
Coastal Properties Group International - Saint Petersburg, FL
St. Pete FL - CRS CIPS CLHMS RSPS

Congratulations on your offer, Jeff! We're seeing a similar situation here in St Petersburg, Florida. Multiple offers on short sales, foreclosures, and "regular" sales. Buyers recognize a bargain, and with more activity, it's still all about price.

Apr 16, 2009 06:18 PM #8
Rainmaker
468,836
Janice Roosevelt
Rory Burkhart Team, Keller Williams - West Chester, PA
OICP ABR, ePRO,Ecobroker

Something is buzzing for sure. We have another one with mutiple offers coming in

Jun 15, 2009 07:59 PM #9
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Jeff Dowler CRS

Carlsbad CA Homes for Sale (760) 840-1360
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