Los Angeles Sweet Digs

September 15, 2009

62% Of Offers Are On Homes With Multiple Offers

In August, our agents in Southern California presented 146 bids on homes for sales and 90 of them, or 62%, were on homes with at least one other offer, up from 52% in July.

According to Joyti Goundar, things are crazy on the West Side and in the San Gabriel Valley: there are so many multiple offer situations that sellers are able to dictate terms.

Joyti recently submitted an offer on a home near Marina Del Rey with three beds, two baths and 1,200 square feet that was listed for $675,000. Our client offered:

  • Full price
  • ~30% down
  • 17-day appraisal contingency
  • 12-day inspection contingency

The listing agent told Joyti there were 14 offers and countered with:

  • $735,000
  • No appraisal contingency and the buyer pays the difference if the appraisal comes in low
  • 7-day inspection contingency and the home is sold as-is: the seller won’t make any repairs or give any credits

Joyti advised her client to walk away:

I would never advise someone to waive the appraisal contingency. Why put my client in a position to pay more than the home is worth? It’s not in their best interest and it’s just not a good idea.

Joyti’s client took her advice and walked away from the deal. The listing agent accepted a counter offer from one of the other buyers.

For more numbers, download the spreadsheet with the data on what happened in August.

Have you had any similar experiences with multiple offers?

Posted by Chris Glew on September 15, 2009 5:54 PM | del.icio.us | Digg

  • In the North Los Angeles Real Estate Market (Eagle Rock, Highland Park, Glassell Park) we are beginning to see these bidding war deals fall apart when in fact the appraisals are coming in drastically lower than the frenzied buyers were happy paying. The properties (usually REO)are being put back on the market with less attention than they received the first time around. Is this sweet justice for our battered buyers?? I sure hope so!
  • Steven
    The banks and the vultures (real estate agents) are just as crooked as they were during the housing bubble. Don't play their games, all these investors will soon run out of money or be forced to sell themselves (bad investment). Rentals are all over the place; and the prices keep on dropping. I was lucky enough to buy in March 2009 (I paid $10k below asking price, got all the closing costs paid, had them through in brand new stainless steel appliances, landscaped back-yard w/ sprinkler system, granite counter-top kitchen plus ceramic tile in all wet areas). It was a brand new house; I guess the builder was desperate. As will the investors be when they see their investment was a trash can (Stock market is better right now for investments). Bottom-Line: If you want to invest buy stock. If you want a house to live in buy below asking price.
  • FHA screwed
    WHY THE HELL HAVNT THEY BEEN TALKIN ABOUT THIS SCREWD MARKET ON TV ARE THEY GONNA EXTENT THE TAX CREDIT OR WHAT BECAUSE I BET NOT MANY HAVE GOT A CHANCE TO USE IT IM FHA AND I DONT STAND A CHANCE THESE OVERSEAS INVESTORS ARE SCREWING THE AMERICAN DREAM AND THE BANKS AND REALTORS ARE HELPING THEM LEAVE IT UP TO ARE OWN TO SCREW US THATS HOW WE GOT IN THIS MESS IN THE FIRST PLACE SO MUCH FOR THE AMERICAN DREAM
  • MIchelle
    We're also FHA buyers and have offered up to $60k over asking price and for us to pay closing costs. But if you're FHA, the sellers/banks won't typically look at your offer seriously. We've been offering on properties in Escondido, CA since Feb09 and we're extremely frustrated that there aren't any means of helping an FHA buyer in this situation. I feel we're being discriminated against by the banks and sellers because we're FHA. The investors are snagging up all the properties that should be intended for first time homebuyers. We've been out at properties the first day it's listed and have put in offers within the hour. But when you're up against 18-20 offers, chances are FHA offers won't be accepted.
  • Brittany
    They care because they don't want to do ANY repairs no matter how small and they want it to close as fast as possible without messing with appraisals..
  • mkell
    What I don't understand is why sellers care whether an offer's FHA or VA (if the property qualifies) or conventional or cash! Once it clears escrow, isn't it all the same to them? Or am I just flaunting my ignorance?
  • i_smell_bs
    Yeah right. More RE agent scare tactics.

    Just wait until the option ARM resets start flowing - that will decimate the high end of LA.

    If you are in a buying panic, I feel sorry for you.
  • Frustrated
    I'm relieved to see we're not alone, I apologise to everyone. I've lost track of when we first began to look. I definitely lost track of how many offers we have submitted. I've lost track of how many we offered considerably over asking price. The most impressive one was 30 or 40something offers and went for 100K over asking price. More than half the offers were higher than my best. My current offer which is over asking price is one of about 10 and the highest is 45K over mine so "another one bites the dust". What pisses me off the most is exactly what someone mentioned about them listing the properties rediculously low to start. I'm sorry but I don't think the agents are helping things for Us buyers based on what mine has "recommended" I do. I think waiting it out sounds like a good idea.
  • ItsJustAHouse
    The multiple offers nonsense happened because realtors encouraged sellers to use "bait and switch" tactics to make a house appear to be underpriced compared to the area, thus causing a bidding war. This is highly unethical, and illegal in any other industry. Only stupid people who will soon be underwater in this still declining market would fall for such obvious tactics.

    Now that fall is here, kids are back in school, and a wave of high-end forclosures is about to hit you can expect the downward trend to resume as inventory grows (already happening, just look at Redfin's listings).

    The "nice" parts of CA are far from immune, and will actually be hit far more drastically since there are more higher-priced houses. The next wave is going to make the last one look like the good old days of real estate.

    Just be patient, prices will come down, a LOT, and SOON.
  • In the North Los Angeles Real Estate Market (Eagle Rock, Highland Park, Glassell Park) we are beginning to see these bidding war deals fall apart when in fact the appraisals are coming in drastically lower than the frenzied buyers were happy paying. The properties (usually REO)are being put back on the market with less attention than they received the first time around. Is this sweet justice for our battered buyers?? I sure hope so!
  • S. Dabasol
    My husband and I have been looking since December of last year. We are Fha Buyers and cant do the conventional loan but have some cash for deposit and closing but EVERY house we put a offer on have offers in the teens and banks and sellers are going for the cash or conventional offers first so we have to step up our game. we offered to pay all closing costs, pay for all inspections etc and then still offer aggressivley over list ( all of which is ludicris) AND that STILL didnt work. We have seen over 125 homes and put in 35 offers and we are still without a home.
  • b. felipe
    I'm a first time home buyer with an FHA loan. I started looking at homes in July of this year and was very aggressive. Every house I put an offer in it had offers in the "teens" number. The so called "bank owned" properties were picking all the all cash or 20% down conventional. So 18 offers later and on a house with 25 offers I finally won the bidding war.
  • JL
    It's really crazy right now. My wife and I put down several offers on multiple locations and all had at least 3 other offers on them. One had 18 offers! Luckily, we just had 1 of our offers accepted in the South High district and are currently in escrow. The trick to this place was that it wasn't listed when we put an offer down. We were just driving in the area and saw a sign. We had a private, non-redfin agent check it out and everything was legit. We were probably one of the first to put an offer down, the offer was decent (still under asking though), and the seller didn't want to play games. So it was just good timing I guess. There's definitely hope for all of you. It seems as though as soon as a property hits redfin though, the vultures dive right in.
  • s.meyer
    My wife and I have been looking for two years in the San Fernando Valley. We made several offers getting out bid on all of them usually these properties are in the 7-8 range and end up going for over 8. We dont qualify for the tax credit because we make over 175. We found a prop. listed at 750 and its an reo. we decided to offer 8 in the hopes that our offer would get accepted because of the over bid and that would be that. Well there were 6 other offers all over asking we were told to make a best and final and our agent said we should do 850. We offered 825 and were picked for the place. We were told that the property is sold as is and the bank will not give any credits on anything. This market sucks for buyers looking for a place in a decent area. It seems that there is still alot of money in california and the people with it are being very acive in this market. Good luck to all and know I hope our place apprases for less so perhaps we can get a bit of a break on the price.
  • Robert
    I have been looking to buy a home for a year and 2 months now. the first six months was buyers market and we were been patient to find something we really like and it backfired. When the $8000 tax credit went into affect i got left out with and an FHA loan and asking sellers to pay closing. NO CHANCE! hope the market gets back to what it was 1 year ago.
  • Alvarado
    I was hoping buy a home before my second child was born, mid November. It isn't just the $8k that is causing this, I have seen homes that are move in ready but need a little TLC get snatched by investors taking advantage of the prices. It leaves a poor FHA buyer out of the running when you are competeing with cash or conventional loans. I see the $8k credit as bounus if I were to get it.
  • TSampson
    We too are waiting out the crazy multi-offer period that we're in. With unemployment still rising, we're nowhere out of this financial mess as a country or a state. Let any of the other multi-offer buyers get "taken" in this $8k credit hype. We're waiting until next year to buy when the feeding frenzy dies down.
  • DPetersen
    At first, we really didn't understand all the hype. After a little investigation, We realized that this credit would only be for the first year. It would benefit us to purchase a house for less money and actually save on the interest over the course of 30 years.

    Our strategy is to buy in December when the credit will be over and sellers will come back down to Earth and if not then we'll wait until the price is right and not overpay or overextend ourselves. You just have to be patient. Don't get caught up in the 'Feeding Frenzy'
  • mkell
    Joyti gave very good advise and her clients were smart for taking it. We haven't seen a place yet in the parts of San Diego we're looking to buy that didn't have at least 4 other offers on it; some had 8 offers within 2 days of listing!

    We haven't yet had a seller come back with such an outrageous counter offer, but the bidding wars are just silly and we refuse to overextend ourselves. We've got our battle plan and we're sticking to it; let everyone else let their excitement or panic force them into overpaying by $30K or more! I mean, isn't this exactly what people were doing before that helped us GET into this financial mess?
blog comments powered by Disqus

Share

Redfin Blogs

Los Angeles Real Estate

Inventory Trends
House $/Sq.Ft.

More Los Angeles Homes and Condos

Los Angeles New Listings

close