Bay Area Sweet Digs

September 16, 2009

70% Of Offers Are On Homes With Multiple Offers

In August, our Bay Area agents presented 89 bids on homes for sales and 62 of the offers, or 70%, were on homes with at least one other bid, up from 62% in July. For Jim Holt, our agent on the Peninsula, the percentage is even higher: 90% of the offers (19 out of the 21) he presented were on homes with multiple offers:

August was really busy and competitive. Homes were getting lots of offers and selling for more than expected. Right now, we’re seeing a lot of buyer activity at a time when things usually slow down: we still have a lot of buyers touring homes and making offers.

Two Extreme Examples From The Peninsula

One of Jim’s clients has bid on four homes listed around $600,000 all with multiple offers in the last four weeks. He hasn’t gone under contract with any of them and all of them sold for more than list price. One house, listed around $530,000, received close to 20 offers and sold for $650,000.

Another of Jim’s clients recently bid on a $800,000 home in Silicon Valley. The listing agent told Jim there were 24 offers and the home sold for way more than she was expecting.

3 Tips For Buyers

Jim has three tips for buyers looking on the Peninsula:

  1. Determine your maximum price: Know how high you can go before you bid so you don’t have to figure this out during negotiations
  2. Know what’s for sale: Be ready to make an offer as soon as you see something you like
  3. Lead with your best offer: Try to put least 20% down and have a quick closing period

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

Where are you seeing homes with multiple offers?

Posted by Chris Glew on September 16, 2009 3:24 PM | del.icio.us | Digg

  • TSampson
    "Multiple offers are common right now because

    1. houses listed WAY below market value. If a house sold $150 over asking but where is that price compared to the market value? It’s never about the asking price."

    Hahaha. If you look at the long-term trending of the housing market, correct comps are around 2000 - 2002 prices. For many areas, we have an additional 20% downward-pricing left to go. How will that manifest? Will prices actually decline? Will the market track sideways for 5-10 years until inflation catches up? Will hyperinflation set in as a result of all the money the Fed printed? Factor in the Alt-A resets that are starting now and continuing through 2014, plus increasing unemployment, plus the "shadow inventory" of all the foreclosures that aren't yet on the market and all the owners 12+ months behind in payments who haven't even been foreclosed on yet! Take all of those attributes, throw them in the bucket, and roll the dice ... and you tell me where prices will be in 5 years. I'm betting not higher than where we are right now -- likely lower.

    No one knows for sure, but I can tell you that as a buyer with cash in hand and great credit, there's no way I'm paying above 2002 comps for anything at this time. You folks want to out-bid each other? Have fun. I'll be watching and laughing, waiting for the other shoe to drop.
  • kim
    There is no demand, it is supply that is being held back. Organic sellers are underwater and the banks are holding back on foreclosing so they don't have to recognize the loss. There are no trade-up buyers, zero.
  • JG
    Rule #1 ... People dont learn...

    Please realize:
    This Govt Scam is underway again...pumping up the balloon again with our tax dollars. Higher the values, more to tax...got it? Let's Repeal Prop. 13 and lets see what happens then.
  • bruce3681
    This story is exactly why I fired my last Agent. Oh yes multiple offers. You had better get in there and join in the frenzy. Buy. Buy. Buy. When questioned she would tone down her reteric and produce reports showing waves of foreclosures coming down the pike. This market is so bipolar even the so called experts are sucked into the madness.
    Our market: Under $350k Only 4, four bedrooms are on the market. Two of those are trash. All of the rest of the properties listed are short sales which are not being processed or falling out of contract. My old agent stated that only 14% of the short sales are getting approved here.
    We are waiting until the games stop and housing prices revert back to the mean. More shoes to drop and much more pain and suffering is on the horizon.
  • jtc
    We're on our 9th offer and may finally win. 6 of those were multiple offer situations in which either cash or substantially higher offers won (like 55k over asking, but undoubtedly a great buy). There were 4 offers on #9---a weak cash offer, don't know about the other 2, and ours--10% over asking because we're going VA (sellers are often prejudiced) and we've been house hunting since February and getting our butts kicked. On #8 the other 2 offers were a least 3-5% over asking if not more (over 400k range).

    I'll have a couple of days to mull over buyer's remorse--- I'm afraid of overpaying, but the market in this area has been ridiculous. Inventory is nil and what pops up goes in like 5 days. (Also, this is a regular sale, which is rare)

    If this is happening in Pinole Valley, where there's not much going on, I can't imagine what it's like anywhere else.
  • sonrisa
    thanks for the clarification -especially the note about the east bay. very interesting.
  • Chris Glew
    techguy-
    We have clients all over the Bay Area trying to buy homes. We post these numbers and tips so buyers are more aware of what the market is like. We don't tell clients that now is a great time to buy.

    sonrisa-
    You're right, the two examples in the post are exceptional. I've inserted a header to make that more clear.

    We are seeing a lot of multiple offer situations all over the Bay Area. In August, 70% of the offers we presented were on homes with at least one other offer across the Bay Area. On the Peninsula, it was 90%. We included two anecdotes from the Peninsula because for most of the summer, most of the multiple offers were in the East Bay.
  • Houseless in Milpitas
    Multiple offers are common right now because

    1. houses listed WAY below market value. If a house sold $150 over asking but where is that price compared to the market value? It's never about the asking price.

    2. Inventory down 40-50% from LY in the areas where I am looking.

    3. Still a lot more demand.
  • sonrisa
    I have trouble reconciling the data on the right with the article above. The graph you present on the right gives an average list price of $527/sqft and an average sold price of $492/sqft. The blog article states many houses have multiple offers. The article then implies those offers are well above asking by citing two anecdotes. Isn't it more reasonable to conclude that the two anecdotes are the exception, and while multiple offers are being made, those are either (1) on a limited portion of the sales inventory (listings which, for some reason, are over represented among the houses redfin customers choose to buy), or (2) those multiple offers are usually well below asking. If this article only represents a few areas on the peninsula, perhaps you should specify that at the top, rather than describe it as a bay area phenomena.
  • MAD IN MARIN
    THE ONLY REASON THESE HOUSES ARE GETTING MULTIPLY OFFERS IS BECAUSE BANKS ARE STILL SITTING ON FORCLOSED HOMES AND NOT RELEASING THEM TO THE MARKET AND MAKING WHAT GOOD HOMES ARE AVAILABLE A BIDDING WAR WHICH IS STUPID BECAUSE WHATS GOING TO HAPPEN TO ALL THE HOMES THAT THEY ARE SITTING ON WHEN THEY RUN OUT PEOPLE THAT QUALIFY NOW FOR NEW HOMES THEY WILL BE STUCK WITH A SURPLUS OF HOMES AND NO ONE TO BUY THEM BECAUSE ALL THE PEOPLE WHO'S HOMES WERE FORCLOSED ON WON'T BE ELIGIBLE. SO WHAT THE MARKET GOES DOWN SOME MORE GEE IMAGINE THAT HOMES IN CALIFORNIA THAT PEOPLE CAN ACTUALLY AFFORD!!! WHAT A CONCEPT
  • Paul W
    We were one of four offers on a nice Belmont place recently and we won it at 4% below asking. The other offers were for 5%, 6%, and 7% below asking respectively. The seller tried to counter us up, but we did not move past what we were willing to pay, and sure enough, they took our offer in the end. There are still some houses priced at desperation levels that will get multiples and even go over, without being irrational exuberance. And there is pent up demand as well, waiting for any sign that the bottom is here. It is a wild and not fully stabilized market. Will unemployment and foreclosures locally prevent a nationally improving economy from pulling the market in the Bay Area up or not? To me, that is the real question.
  • San Jose
    Insidesfre is right, multiple offers don't mean higher price necessarily. I sold my San Jose house earlier this year. We had 4 offers - all under asking! I ended up with a reasonable price, but the 4 offers certainly didn't mean way over asking either.

    And, anything can be sold for over asking - try listing a house for $100k and it will certainly go for over asking.
  • The past few offers I've written with clients in San Francisco have been multiple-offer scenarios. My take on this is that many buyers spent the first half of the year on the fence, anxious about job security & low consumer confidence levels. However, I'm not seeing homes sell for wildly over the asking price. Multiple offers do not necessarily translate into inflated selling prices.
  • techguy
    I know redfin started by saying they are a different kind of RE Agent, one that believes in representing the buyer. Why are you folks (@Redfin) taking part is fueling the buying frenzy here ?

    People who are buying right now, paying way over asking price are making bad decisions, and are being brainwashed by RE agents.

    Once NUMMI closes more job losses, apart from tech and cars, what other industry exists in East Bay ?

    Where are people going to get work ?

    Think/Evaluate, ofcourse buy if you get a sweet deal but don't get carried away.
  • Chrisfenton
    This is the free market / supply and demand working itself out with a splash of auction fever.

    Come on people, the starting prices are set artificially low. If the starting prices were more realistic, nobody would complain about 3-5% over asking, and 10 out of 12 of those bids are the same low ball bidders on multiple homes.

    This is hype created by the industry to get people out of the apartments and into the bidding frenzy.

    No news here.

    Like my man Chuck D said "don't believe the hype!"
  • Veronica
    This is definitely going towards another market crash. Folks, refrain from the buying spree that was seen before the crash. You are going to be in a crash like that soon again.
  • Raed
    This is crazy!
    it's like the housing crash never happened.
    150K over asking?
    My Wife and i have been touring for 4 weeks now, we placed 2 offers both on houses with more than 1 offer.
    i'm willing to wait for the right deal, 30% over asking is plain stupid!
  • Rajan
    And what, get ready for another Real estate crash!
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