Real Estate Multiple Offers and Bidding Wars ... again?

Have you been out house hunting lately?  Are you surprised at hearing that multiple offers are coming in on the properties you are looking at?  Are you even more surprised to see that the offers on properties are more than the asking price ... again?

While this is nothing like the 2006 market where we were seeing the prices of all homes, condos, and town-homes climbing in price almost monthly, Realtors and their buyers are talking about the current bidding wars and slight price increases they are seeing this summer (2012) ... especially with the properties that are priced around $350K or lower (in the Santa Clarita Valley, at least).  And buyers are asking, "Why?"

The number one reason why we are seeing the multiple-offer-bidding-wars game return is:

Very Little Inventory

Along with historically low interest rates, there just simply is not enough inventory in this current market to meet the demand.

Why is there little inventory?  Because many sellers simply cannot sell yet.  Many sellers, who are making their mortgage payments, are still "underwater" and cannot sell at any profit so the majority of the homes that are coming on the market are the Short Sales or the Bank Owned/Foreclosed properties.

And little inventory is usually met with multiple offers.   And with multiple offers, there is usually a bidding up in offer prices. 

Buyers who write an offer or two, and loose in the multiple offer game, usually start bidding higher.  And sometimes even higher.

I recently sold a condo in Canyon Country, California where 7 offers came in on the condo, with two of the offers at $32,000 OVER the asking price.  $32,000!  I don't think any appraiser would justify that loan in this current market.  But some buyers are even willing to pony up their own money right now, when the appraisal doesn't support the winning offer amount.  And Investors, who pay with cash, don't need any appraisal at all, if they really want the property.


Redfin recently had this to say about the matter:

Where’s the inventory? As banks have fewer foreclosures ready to sell, regular home-owners aren’t picking up the slack. In lieu of listing their home for sale, owners can re-finance the place — or just wait for the teaser rate on their 2007 loan to re-set at what has turned out to be a far-lower rate — then find a renter.

And finding a renter isn’t hard to do: after four years of short sales and foreclosures, an unprecedented number of Americans can only rent, not buy, regardless of price-to-rent ratios, just because of their low credit score. As a result, owners can get $300 more in rent than their mortgage payment, all while waiting a few years to see if prices improve. 

Redfin elsewhere reported:

“This townhouse was listed for $475,000 and has a $389/month homeowners fee,” said Redfin agent Miawand Bayan. “My clients offered $486,000, all cash with no contingencies and a ten-day closing. The result: The home was pending after seven days with 16 offers. It went to an all-cash buyer for over $520,000 with a seven-day closing and no contingencies. That’s $40,000-$50,000 over asking on a townhouse with a $400 per month HOA.” 

... and this ...

“My client offered $375,000 with 20% down, and was willing to cover $20,000 for a low appraisal with ten-day contingency, said Redfin agent Frank Wong. “The seller got 53 offers on the home, and the listing agent finally had to tell people to stop submitting offers.” 

Wow.  So buyers take note!  Your real estate agent isn't trying to get more money out of your pocket and into their own ... they are telling you the truth:  multiple offers and bidding wars are back ... at least in some areas and in certain price ranges.   It is another very interesting time in real estate!

For any questions regarding the above or if you are thinking about Buying or Selling Real Estate in the Santa Clarita Valley, 

feel free to call me at: 

LeeAnn Bell at 661-309-2364

Here is what one client had to say about working with me:

Given the difficulties this sale presented (the foundation was cracked) you offered every option, answered all questions, and explained all paperwork immediately.  I would not hesitate to refer you to my family and friends.  - Gary R.

Read This Related Article: Historically Low Interest Rates make this a great time to buy real estate

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(c) 2012 LeeAnn Bell, REALTOR(R)
DRE License #01260650