84% Of Offers Are On Homes With Multiple Bids
We were surprised to see that only 84% of the homes our clients bid on in June had multiple offers. Our agents say it feels like every home for sale has multiple offers on it. In June, our Bay Area agents presented 73 offers to listing agents and 61 of those, or 84%, were on homes with at least one other offer, up from 69% in May.
In the East Bay, many of the homes with multiple offers are bank-owned properties that have been priced way below market value to attract a lot of offers and create a biddingwar to drive the price up. Now individual home sellers are catching on to this strategy. According to one of our East Bay agents Charmaine Frank:
Sellers have begun to realize if they want their homes to sell, they have to compete with the bank-owned homes. Any home that looks like a deal is going to have multiple bidders and will sell for much more than the list price.
In San Francisco, good homes with competitive prices are getting a lot of attention from buyers. Redfin’s agent in San Francisco Gina Pio Roda says:
Listing agents in the city know the summer is key and they’re making sure homes are well priced. Over the last few weeks, I’ve seen a lot of multiple offers in Noe Valley, Glen Park, Outer & Inner Sunset and Parkside.
On the Peninsula, the jump in listings with multiple offers is due to families trying to buy in between school years. According to our Peninsula specialist Jim Holt:
The summer market is competitive. For parents with school-age kids, it’s much easier to move when school’s out. Right now, I’m seeing lot of competitive offers in areas with well-regarded school districts.
When bidding on a home with multiple offers, buyers need to put their best foot forward and make every part of their offer competitive, not just the price. Jim advises his clients to “show the seller you’re serious right from the start because sellers often counter only the best offer.”
If you’re bidding on a bank-owned home with multiple offers, here’s some advice from Miawand Bayan, our agent who covers the East and South Bay:
You may have to get pre-approved with the bank that owns the home. Bank-owned homes, especially in the East Bay are getting a lot of attention from buyers — in some extreme cases, there have been over 70 offers on the same bank-owned home. It’s easier for the bank selling the home to evaluate all the offers if the bidders have been pre-approved through their own mortgage department. You don’t have to use the bank for your mortgage, but they often offer some incentives worth considering.
What are your experiences bidding on homes with multiple offers?
A. Ben said:
I have been trying to buy a home in the east bay for over a year now. I have been unable to compete with my FHA loan offers even though I have always offered more than asking price. To me, the market is the hottest it is ever been. I never had a problem finding homes I like. I never had problems qualifying for loans. I have had problems competing for the homes.
July 22, 2009 8:12 PM
S. Benec said:
Pricing below market is a vicious cycle. Yes it may start a bidding war and benefit a single seller, but it is going to drag down the market price, especially because there is a lag before the sold price is published.
If every seller list lower to get attention, buyers are going to look at the Redfin listing price trend graph and think, hum, the market is still tanking.
July 23, 2009 5:39 AM
S. Benec said:
According to the latest PMI Market Risk Index, the San Francisco-San Mateo-Redwood City market ended the first quarter of 2009 with a 66.2% likelihood of house price declines over the next two years, up from 31.6% in the fourth quarter of 2008
http://www.socketsite.com/archives/2009/07/pmis_market_risk_index_report_1st_quarter_2009.html
I think much of the frenzy is due to seasonality.
July 23, 2009 5:42 AM
Hibryd said:
Thanks for offering a macro view of what’s going on. We’re planning on buying this year, but we’re thinking of waiting until school starts up again.
July 23, 2009 6:52 AM
Tubby said:
I’d *love* to see this broken out by price range. My impression is that the upper end of the market is still stagnant, while the mid-range and lower-end are hot because the prices have already undergone their correction.
Perhaps a days-on-market by price point (in $300K increments)?
July 23, 2009 5:08 PM
Dem said:
Again, the bank is not learning its lesson because of greed. We can see a collapse of our president’s initiative to help the industry. We will see more houses back in the market because of false representation. How many people can afford to play the bidding war?
July 24, 2009 9:58 PM
johnny said:
mortgage payments are equalizing with rental rates, that is why there is so much activity. but you know what? rental rates are falling and fast, which doesn’t support home prices increasing, but in fact the opposite as they compete with each other. there is no real support in the market, prices will continue to decline.
July 25, 2009 9:09 AM
Dee said:
My husband and I are first time buyers and an older couple. We are looking for a special kind of property for a good and reasonable price. We offer what the asking price is and sometimes alittle more, but then counteroffers come back wanting $10,000 more. We can’t afford that. We want to keep our monthly mortgage payment low so we don’t get into a house and then we end up going into foreclosure. Real Estate people want us to pay more and the banks want us to pay more. My huisband and I said the real estate right now has become a silent auction frenzy. We bid on what we can afford. We’ve been FHA pre approved and would like to get into our only home, as we are first time buyers and would like to settle in. As it is my husband commutes to work 2 hours each way to work everyday and it’s taking its toll on him and me.
July 25, 2009 9:05 PM
Linda said:
We been trying to buy a house for the past year and have not had any luck. We have come across here in Monterey County with Real Estate AGENTS keeping the bid in house and not giving a fare chance to the other agents, I guess they dont want to share the commision.
July 26, 2009 11:50 PM
Walt said:
Well… you’d expect June to be selling better than May, and July and August should be better as well… it’s the summer… It’s really not practical to compare June to May, but June ‘09 to June’08. That is the summer months always have greater buy’s than the spring and winter months.. if the summer was worse than the spring, the actual market trend would be horrible…
July 27, 2009 12:37 PM
Redfin’s July Newsletter… | Redfin Corporate Blog said:
[...] to get into the property; sometimes we take three clients through the same houses on the same day. 84% of our Bay Area offers in June involved a bidding war. Nationally, the supply of existing homes for sale fell to 9.4 months; a sellers’ markets usually [...]
July 28, 2009 9:42 PM
Stories from the Field: Multiple Offers in the Bay Area | Redfin Bay Area Sweet Digs said:
[...] Last week we reported that in June, 84% of the homes our clients bid on in the Bay Area had multiple offers. [...]
July 29, 2009 6:33 PM
ptwn said:
We’ve looking for homes from Dec and put as much as 40 offers. We got some counteroffer from the banks but finally we settled in May for house in San Jose, sold price is 40K higher than the sale price. Luckily the appraisal comes lower than our buy price.
July 30, 2009 2:23 PM
quit whining said:
quit your crying. the home sells for market value. plain and simple. it doesn’t matter where the “STARTING PRICE / OPENING BID” starts. People are crying because they think they can actually get a “steal” on the house, get emotionally attached, then their dreams are shattered when the price goes up beyond what they can afford.
If you can afford $300K, look at houses around $225K, not $300K because they will not sell for that. always want something for nothing.
August 13, 2009 6:59 PM