Overbidding is everywhere in the current Bay Area:
2 posts to read:
Current Bay Area Market NOT A Bubble: Top 5 Buyer Recommendations
Tough Year Ahead: Top 10 Issues Facing Bay Area Buyers
Like many Alameda County Realtors, I spend time almost every day writing offers. Each offer represents a clientâ€™s hopes, dreams and aspirations and, in many cases, their frustrations as offer after offer meets with rejection. While itâ€™s true that we ARE getting offers accepted, when you have one property and thirty hopefuls, at the end of the day, only one gets the keys. The remaining twenty-nine go off to the succeeding round of open houses hoping to get lucky the next go-round. While some buyers may fade away in defeat, others join in the dance bringing new energy and hope to the melee.
While house after house comes on the market only to disappear just a few days later, one constant remains: multiple offers. Itâ€™s been so long since weâ€™ve experienced a â€œnormal market in the Bay Area â€“ either we have a down market with multiple houses and one offer â€¦ or todayâ€™s red-hot market with one house receiving multiple offers. The trick is to figure out what type of market you are currently in and leverage that market to your advantage.
Since weâ€™re currently in a sellerâ€™s market and multiple offers are a given, itâ€™s important to understand the existing market metrics. In a recent meeting with Central County agents, Carole Rodoni,* President of Bamboo Consulting, outlined the following guidelines:
List Price Price per offer submitted
$200,000-$400,000: increase of $2,500-$5,000 for every offer including yours
$400,000-$800,000: increase of $7,500-$10,000 for every offer including yours
$800,000-$2,000,000: increase of $12,000-$15,000 for every offer including yours
$2,000,000 and above: increase of $20,000-$25,000 for every offer including yours
While itâ€™s obvious that there are no absolutes here â€“ every home receiving offers is different based on condition, amenities, location and a number of other factors â€“ these formulas at least provide a framework with which to begin. The fundamental key is determining whether or not any give propertyâ€™s list price is realistic â€“ if itâ€™s low, you have to adjust upwards; high, you tweak it down. Another key is trying to get feedback from the listing agent as to how many offers are either already in hand or anticipated.
Thinking of simply writing an offer at list price? Your chances in the current market closely resemble those of a snowball in a very hot place â€¦ it may look pretty for a few seconds, but will quickly disappear in a burst of steam.
*Carole Rodoni was formerly President of Fox and Carskadon Real Estate, Chief Operating Officer of Cornish and Carey Real Estate, and President of Alain Pinel Realtors.