Wednesday, March 20, 2013

Bidding Wars Return

When I ran this morning, it was 29 degrees, with wind chill that made it feel like 17 degrees, so it didn't seem like the first day of spring, but it is!  And with spring comes the spring real estate market, which we are definitely seeing.  The surest sign of an improving sales environment is to have a listing come on and receive multiple offers right away, and that's happening.  Although we don't yet have the shortage of supply that other markets do, it's true that most of what is selling has just come on the MLS, and is garnering attention immediately.

Buyers have been coming in close to asking price on properties correctly priced to sell.  In more cases than we've seen in a long time, several parties have come in at once, leading to situations where buyers have been asked to produce a "highest and best" offer.  Just to be clear, that does include price, but it also considers terms, so offers that are cash, or that don't have inspection clauses, are usually favored over offers with contingencies.  We realize that buyers often doubt the veracity of real estate agents who say that they have another offer, so I'm using this forum to make sure that everyone knows that it is indeed happening often these days.  While there may indeed be cases where an agent claims to have another offer coming in to raise or accelerate a bid, it is true that, even with properties that may have been languishing for months, there are instances of multiple bids.

What does this mean for sellers?  First of all, it doesn't mean that you underpriced your property.  Things priced to sell quickly go for more than those set higher, even though that may seem counter-intuitive.  Buyers go higher when they perceive that the price is attractive, because buyers today are well-informed, and they know what properties are worth.  Also, since mortgages require appraisals and appraisals depend upon comparable sales sold recently, rising prices mean difficult appraisal situations, since appraisers can only use closed properties as comparables, and those contracts are already several months old when they close.  So, you can hold out for more money, but your buyers may not get a mortgage for the higher amount.

And what does it mean for buyers?  You'd better get out there soon...and don't fool around.  Offer what you would be sorry to hear that someone else bought it for, and do it quickly.  Make your offer as clean as possible, and don't ask for contingencies you don't need.  You'll never borrow again at rates this low, so be happy and buy now!