Itâ€™s like a world gone mad: hundreds of buyers lining up to get homes they can finally afford, but no matter what they do, they canâ€™t seem to get one. Not just a San Francisco problem, itâ€™s across the entire Bay Area. The result? Disappointment, frustration, even anger. Directed at whom?
It goes without saying that Realtors arenâ€™t the root of the issue. Cash only for listings? We're only the messengers - we're not making up the rules. Weâ€™re not the reason that the Bay Area is experiencing an inventory crisis, nor are we responsible for soaring prices. Just like weâ€™re not responsible for record low interested rates. Larger forces are at work. We are, however, the most visible targets in sight and, ipso facto, the ones getting the heat. So much so that many buyers, having written numerous offers with one Realtor, are switching to another and another and another just to see if the next has some market secret the first, second or third didnâ€™t have.
Itâ€™s time for everyone to take a deep breath and remember how we ended up here. The market reversed in February, 2012 and has been a sellerâ€™s market ever since. Foreclosure listings have dwindled to a trickle (there is NO foreclosure shadow inventory in the Bay Area). A majority of normal sellers have decided to sit tight. Many distressed homeowners, previously under water and candidates for short sales, are now back in the black. Others have decided to capitalize on low interest rates to invest in their current digs and remodel rather than relocate.
Consequently, inventory is down 25% from 2013. Additionally, cash buyers are out in throngs, causing a Bay Area wide jump in cash transactions from 31% last year to well over 40% in Q1, 2013. And they are not just investors - many families are pooling cash resources to help other family members buy a home they will personally live in.
Sellers, sensing blood in the water, are demanding offers be written with no appraisal contingency since itâ€™s obvious they wonâ€™t appraise at offered prices. In the midst of this, some buyers still believe they can offer under asking because they donâ€™t â€œfeelâ€ any given property is worth as much as others are willing to pay. Realtors, trying to advise buyers what they need to do to get a home, become the bad guys because buyers donâ€™t like what they are hearing. Thus they switch to another Realtor, hoping that somehow something magical will happen.
In your specific case, it's not the listing agent who decides whose offer gets accepted. If they say the listing is "cash only," it's usually because of condition or title issues and it's the bank and asset manager insisting on cash, not the realtor. If they say "cash only", don't bother writing an offer on it with a loan - they will ignore it because you didn't follow the rules.
9 offers? Some have made over 20 before they get an offer accepted. Like it or not, the market has changed, and if you want a home, you are going to have to figure out the current rules of engagement ... and play to win.