Finally, the wave of inventory shortages that has swept the country for several years has made it to Connecticut. In our case, years of not building new product, and a delayed generation of first-time homebuyers has combined to create a scarcity of homes for sale in South
Central Connecticut. That means that those looking are jumping on whatever new listings there are, and causing immediate offers to occur on many homes. And we all know what that leads to--multiple offers!
Maybe surprisingly, many real estate professionals find markets like that as stressful as, or even more stressful than, poorer markets,where nothing is selling and sellers are unhappy and sometimes demanding. In the markets where inventory is scarce, people are forced to make quick decisions on offers, both making and accepting them, and that is difficult as well. Buyers may get caught up in the thrill of the chase, or may start to bid high in order to stay in the game, often after losing other bidding wars. This creates a feeding frenzy, maybe not quite like tulips in Holland hundreds of years ago, but the same idea on a smaller platform. Buyers drive prices up with bidding wars, sometimes using escalator clauses, which I will discuss in another column. Sellers may counter more than one buyer, and then have to be careful not to sell a home twice; alternatively, they may accept an early offer, then regret it, and try to accept another one later, by getting out of the first one. Negotiations on inspections and mortgage delays are complicated by backup offers in the wings, and will change the dynamics of any discussion. That can leave buyers in a situation that they either can't afford, or didn't really want as much as they thought they did. Both scenarios lead to unhappiness down the road.
If you are a seller, think in advance about the number you will accept, and don't be a pig. Take that offer if and when it comes along, and don't negotiate with more than one person at a time. If you are a buyer, decide how high you will go up front, and don't get sucked into going up, if you can't afford it. Don't then think that you deserve to ask for the moon during inspections, because you may have paid more than you expected. If all of these guidelines are followed, then both parties should be happy--the sellers with a quick and successful sale, and the buyers with a happy new home.
