Recently, the housing market has begun to catch up. Especially houses within the $300,000 to $500,000 price range, as long as the price is right and the house is in decent condition, immediately there would be twenty to thirty offers. Paying in cash no longer guarantees that you would get the house, because there is more than just one cash-paying buyer. Therefore, real estate agents sigh that money is “hard to earn,” and buyers who have submitted multiple offers yet cannot seem to seal the deal feel bitter. In the past couple of years, things looked great, where buyers did not always have to compete against cash buyers and could sometimes even bargain with sellers. Not to mention the abundance of listings, which allowed buyers to be very choosy. However, the good times are over!
Currently, the market situation is as follows: the amount of houses for sale this year compared to the same period last year has decreased 50% to 60%. Therefore, as long as the listing price is reasonable, houses are sold within a week or two. If it is a short sale and the listing price is lower than the market average, then there is almost guaranteed to be a battle. Conservative bid, incomplete loan documents, insufficient down payment, etc. will all turn the buyer into a “lame duck”. If the buyer’s agent does not have a good strategy or is inexperienced, then the buyer will definitely be “killed in action”!
In this super-developed informational “E” generation, buyers have access to almost the same amount of information as do agents. But having seen a house does not guarantee that you will end up with a deal. Buyers come across a listing that they feel meet their needs, and contact their agent. They see the house, and submit an offer. But successfully purchasing one’s dream home will depend on the buyer’s financial strength (i.e. bid and loan capacity), the sensitivity and experience of the buyer’s agent, as well as leaving a favorable impression on the listing agent. In the case of comparable offers, if the listing agent prefers a certain buyer’s agent, then her client will get the deal. The offer itself is not the absolutely decisive factor. I will give you a personal anecdote. Early this year, I had to travel to Taiwan, because my mother who is in her 80’s had suddenly lost her memory. On the same day of my flight, I checked to see if there are new listings that meet my client’s requirements. As soon as I turned on the computer, I saw a house in Diamond Bar that was 4,500 square foot, with a view, pool, 5 bedrooms 4.5 bathrooms, it was in a gated community, and within the walnut school district—everything my client wanted. And the listing price was only $1,184,000. Immediately, I called my client at 7:30 in the morning. She said, not a problem, her husband had just gotten back from a trip to China, and she could wake him up and be at the house by 8 o’clock.
When I arrived at 8:00, my clients were already there. The husband was still jet-lagged and bleary-eyed. We saw the house in twenty minutes, and they were very satisfied. We went back to my office and immediately began writing an offer. Because it was Bank of America’s short sale, in my experience, their action is excruciatingly slow and they would take around ten days to two weeks to finalize. Our conclusion was to submit an offer first, but not the bottom price. So we offered $1,200,000. That afternoon I got on my flight. The rest was up to “remote control” and the help of my team (two assistants and other agents). The duration of the flights are quite long, and I usually prefer to read when I travel as it is an excellent way of not wasting time. You can see here a few of the things I like to read.
Sure enough, ten days later, the seller’s agent sent a counteroffer asking every buyer for their Highest and Best Offer. I called my clients to discuss how to bid. There was a property nearby of similar size and condition that was sold for $1,250,000 the first day it was on the market. Therefore, I estimated that some buyers will counter $1,250,000, so I suggested that we add $3,000 and counter $1,258,000. My client said that she likes “whole” numbers and suggested $1,260,000. She asked if I was confident that we would be able to secure the deal with this amount. I thought for a moment and decided that there was a 90% chance. She then agreed to bid $1,260,000. Four hours later, I called the listing agent to see if he has received our counteroffer. The first thing he asked was “why did you bid so high?” I replied that it was my client’s wish. In fact, at that moment I got the feeling that we would get the house. Sure enough, three days later, the listing agent notified us to make a deposit with the title company, because we got the deal.
I found out after the fact that there were seven buyers who submitted offers, three of which were cash buyers. We were buying with standard loan, but we closed the deal.
In conclusion, you need to be fast, aggressive, and accurate when purchasing a home now. Do not hesitate. The market has already climbed back up. Buyers, you need to step up your game and enter the market while loan interests are still ridiculously low and loan auditing is relatively lenient. I wish you luck.