In the midst of a struggling economy and struggling real estate market, we have had an interesting week with two of our buyers, losing out on properties that had multiple offers. Yep, we just had two bidding wars in one week! Is this a sign of the market turning in favor of sellers? Not likely, but it is interesting to look at what caused this. As a seller in today’s market, I think it also provides some insight into the current psychology of the real estate market.
Condo in Fremont – This property is a 30-unit condo conversion in a prime Seattle location. After selling roughly 70% of their homes, the building has struggled to sell its remaining inventory. The builder obviously ran into financial trouble and the bank is forcing a sale at lower than market prices. After the 1-bedroom units broke the $200k price barrier, there was substantial interest. Our buyer’s first choice already had four offers in two days, and we just lost on our bid for her second choice.
Recent construction in Bothell – The Bothell area currently has a fairly high inventory of new and recent construction homes. This particular home was built in 2005. It went all the way through the foreclosure process and went to a trustee auction in Oct 2008. Before the auction, they tried to sell it unsuccessfully as a short sale. The loan balances on this particular home were huge, which likely prevented a successful short sale. It also did not sell at auction, so it became a bank-owned property. The bank turned around and re-listed the home for $96k less than the previous listing in October, and it had two offers in one day driving the list price back up. Based on a recent sale we made in that neighborhood, the home was under-priced by at least $50-75k.
Our buyers were obviously disappointed and a bit surprised by this frenzy of buying activity. What does this indicate about today’s market?
- Buyers still take action when they see value – Clearly there are buyers out there ready to pounce on properties when they perceive a good deal. If you see a property that appears to be a great deal for the neighborhood, be prepared to take quick action and make a bid. Despite a slow market overall, there are buyers sitting and waiting for the opportunities to show up.
- Aggressive pricing can get a home sold – Both of these examples had bank intervention that drove the prices below current market values, ultimately resulting in multiple offers. As a seller, just remember that if you can make your price stand out against the competition, your chances of an offer go way up. If you are strongly motivated to sell your home, make sure that your price is better than everyone else’s on the block.
- Make your best offer when dealing with banks – In general, there is not a lot of back-and-forth negotiation when the seller of a property is a bank. If there are multiple offers, they will likely accept one of them rather than negotiate, so put your best offer together in hopes of winning the bid.