One of my friends sold her house with multiple offers last week. We are planning to buy a new home this spring – are we going to find ourselves in the middle of a bidding war?
It is true that some of our inventory has seen multiple offers in the past couple of weeks! Even with multiple bids, however, buyers are still cognizant of value and sellers who bought or refinanced their equity out in earlier years may not yet see a return to those value levels.
Why are we seeing multiple bids? As I have mentioned in previous articles, our inventory is down substantially. Our typical inventory sources have been slow. Corporations cut back tremendously on relocations post-2008 and have transferred fewer employees in recent years. Trade-ups or trade-downs have decreased significantly, in many instances because sellers can’t find anything to move to. And so it becomes a vicious circle. At the same time, the lag in inventory introductions has been going on for quite a long time, so many buyers are just plain tired of sitting on the fence and are beginning to compromise on their criteria for a new home. When a new home comes on the market and is well-conditioned and properly priced, or when a home that has been on the market for a while has a price reduction, they spring into action, often resulting in multiple bids.
So what do you do if you are one of those buyers sitting on the fence, waiting for your perfect home? You need to have educated yourself on our market so that you recognize value when you see it. You need to be working with a buyer’s agent whom you feel has a thorough knowledge of the market and can correctly advise you on value. And when that home does become available, you need to make the best possible offer. Weaker offers contain terms such as long inspection periods, long mortgage approval periods, low hand money amounts, delayed closing dates, home sale & home appraisal contingencies and low offer prices. If a home is new to the market or recently had a price reduction, you need to assume it will sell at or close to asking price – if that’s not a price you are willing to pay, stand back – perhaps another buyer will see the value.
As for sellers, you need to follow the advice laid out in my earlier articles. Make your house that shiny penny, price it right, and you could receive a full price plus offer in less than one day!