#714 in a series of true experiences in real estate
“I’m not taking on any more buyers until the ones I have now get houses,” an agent told us this week. “There aren’t enough listings and everything sells in multiple offers. I’ve got people who have lost 3 houses. It’s awful.”
From several other agents we’ve heard, “If one more person says to me, ‘What a great market. You must be making all kinds of money,’ I’m going to scream. Don’t they get it? This is only a good market for sellers.”
The crazed competition we are experiencing is good for sellers, especially for sellers who are not going to also be buyers here, but it is very difficult for buyers and their agents. Too often they look, they find, they try, and they lose. In every multiple offer situation, there is only one winner.
The others become emotionally attached to the house; they’d thought and dreamed before deciding they’d like to live there. In an effort to have the cleanest possible offer, they may have invested hope, time and money having inspections done before they knew if the house would be theirs.
They’d already been preapproved for their loan. They had agonized over their bid, made it as high as they could stomach and signed a mountain of paperwork. They may have offered concessions to the seller, agreed to pay many of the seller’s normal costs, allowed the seller to remain in the house for a period rent free, or both.
Then they waited nervously by the phone to find out who won. None of this was enough; they were outbid.
“How high will it go?” buyers ask over and over again. “What will I have to pay to get this house?” they wearily want to know. Their agents don’t have the answer. We’re seeing 20 percent overbids, sometimes as much as 30 percent over asking.
We continue to hear from some buyers, “I won’t be a part of this multiple-offer madness. I don’t want to compete for a house.”
But if what these people wish to buy is what many others want too, they’re pretty well stuck with things as they are. Clean, light and attractive houses, especially those it seems within walking distance to BART and good coffee, are in amazing demand. And increasingly, lesser houses in less-sought-after areas are also being bid up. This is even sometimes true for fixers, houses that need a lot more than paint.
“I just can’t advise my buyers to go as high as I’m seeing in the sales,” some agents are saying. “What’s going to happen to them when the market goes down?”
Surely the market will go down sometime, but when will that be? No one knows. We had buyers last year who said, “Things will be better next year, we are sure.” These buyers cannot afford now what they might have bought then. They don’t even know which houses to consider because those priced near what they can handle so often sell for much more than the seller is asking.
At the moment it appears that it will take a great number of listings to satisfy the number of buyers out there. Sunday open houses often draw 150 people, a number of them fleeing from an even higher market area such as San Francisco. To them, our prices are refreshingly low. It doesn’t look like the market will be more balanced anytime soon.
What’s a buyer to do? How can he be successful? The buyers we’ve worked with who did buy, who made the winning bid, had a number of things in common: They were prepared. They had completed their loan applications and had been formally pre-approved for a loan with a proven lender. And they were devoted: Buying a house wasn’t a sometime thing.
These people were available to see houses on agent tour day and on Sundays. For some hours every single week they looked at houses that we told them about as well as others they’d selected from ads they’d read. A few searched the Internet everyday for new listings, then called us to get more data.
Looking for the right house became an important part of their lives, sometimes for a number of months. They arranged their work schedules to accommodate the search.
Also, they were flexible, able to embrace different areas, styles and levels of needed repair. An old roof or a large termite report did not automatically put them off. Instead, they gathered information and costs of repair before deciding whether to move forward.
When they did decide to offer on a particular house, while not foolhardy, they were brave. They suffered over what to offer, then made their highest, cleanest bid, one that they would feel good about if it was accepted.
If, in spite of all these things, they failed, they did it all again. One of our buyers did everything right from the start. He watched the Internet, he went on agent tour, he considered fixers and move-in houses. And although he bid way over list for the first house he wanted, he lost. He told us afterward, “When I heard, I cried. The next day I was angry. On the third day I went out looking at houses again.”
The real key here is steady drive; buyers can succeed through dedication to their task. Truth: It is not now a time when people can “kinda sorta” want to buy and expect it to happen.
P.S. We wrote this column 17 years ago, in 1998. All is true again.
