Home Edition | News From Your REALTOR®
Elyse Umlauf-Garneau
The phenomenon of multiple offers, a situation in which multiple buyers
submit bids for a house and end up competing for it, has returned.
It was prevalent in the strong market a couple of years ago and, now,
with dropping prices, some sweet deals on distressed properties,
relatively low interest rates, and an $8,000 federal tax credit for fi
rst-time buyers and a $6,500 credit for repeat buyers, some markets
have heated up again.
In fact, California practitioners report an explosion of competitive
bidding, and in some places supply actually is shrinking and prices are
ticking up.
The result is that some buyers who are anxious and able to enter the
market still are losing out. For example, Andy Bencosme, 2009 president
of the Arcadia Association of REALTORS®, says one of his clients has
bid on—and lost out on—12 properties.
Wondering how to prepare? Keep in mind:
• Competent advice: Seek REALTORS® who can explain how competitive a
market is, and where you fi t with it, and who are able to prepare you
for the process—and potential disappointments—ahead.
• Investor competition: You may be competing with investors delivering
contingency- free, all-cash offers. Be prepared to deliver your best
offer, if need be. Also, get prequalifi ed for loans, have all
paperwork in Order, and know precisely how high you can afford to bid.
• No automatic low balls: Despite market challenges, don’t
automatically make offers dramatically below asking prices. If you’ve
been eyeing a property that has seen multiple price reductions and
you’re ready to jump, others likely have been doing the same. It makes
for stiff competition. “Some think that if an asking price is $325,000,
they can get that house for $250,000. That’s not the case,” comments
Bencosme. Study neighborhood comparable properties that are for sale
and that have sold and consult with your REALTOR® to develop strong,
realistic offers.
• Buy less: Just one reason to look at property below your means is that you’ll have money in reserve to bid up if you need to.
• Short sales: The process can be tedious and lengthy. One California
REALTOR® says short sale acceptance dates can run two weeks to six
months. Negotiating short sales can be tricky, so be certain your agent
is experienced in the process. And know whether you have the stomach
for such a route.
• Bank-owned property: Again, you may be competing with investors. Work with your agent to determine properties’ worth.
And Bencosme suggests making yourself as attractive as possible. That
may entail offering a larger down payment, not requesting closing cost
assistance, or agreeing to a shorter timeline.
“The more you have your ducks in a row before making an offer, the more
sellers will see you’re ready, willing, and able to complete the
transaction,” he says.
Reprinted from California Real Estate Magazine
January/February 2010 pg. 34
