Home Buying Frenzy

There was an article in the Medford Mail Tribune regarding home buyer frenzy. Although the article was talking about the Phoenix AZ area there is the same frenzy going on in Southern Oregon within certain price ranges.

Recently I have written multiple offers for multiple first-time home buyers on different properties as each property had competing offers at the same time. The standard response from the listing broker is that ‘the seller has countered everyone to come back at their highest and best offer.’ Now while this seems at first blush to be a ‘fair thing’ to do but honestly I sometimes wonder if my clients’ offer wasn’t already the highest and best and the seller is just hoping to get a few thousand more dollars out of a panicked buyer who is afraid that they will loseWeight Exercise out if they don’t come up.

Real estate is very much a game of poker. What do I tell my clients? Raise your price, come down on your closing cost requests, hold at the price you are…? Really it all depends on the client and how they feel about the situation. When teaching first-time homebuyers about the ins-and-outs of a transaction it is important for them to understand every aspect of that transaction.

I will use the example of a property I was working with my clients recently. It was a small house in an outlying area. It was on a cul-de-sac, several other properties on the street looked distressed also and this one was purchased very likely at the courthouse steps by this investor. I know he is an investor based on the name on the listing. I also know that he just recently purchased it because the deed still isn’t showing up in his name on the county records yet.

My first thoughts were…priced well, couple of days on the market, competing offer, investor owned, needs work. My clients wrote an excellent offer and requested closing costs. The counter offer was increased to include the closing costs. This is where we had a long talk about an appraisers role in the selling process. We discussed what kind of a red flag the appraiser would have with that counter offer. I explained to the clients about the fact that they could loseWeight Exercise not only their inspection money but also their appraisal money if the appraiser didn’t like the fact that closing costs were added on top.

I ran comparable properties for my clients to show them that the value was likely there even in the counter offer, but I couldn’t tell them how an appraiser might respond. We talked about the response to that offer being different if the property had been on the market more than 60 days. The listing agent stated they felt it was priced to sell and that they felt confident they could get their price in a short time even though ours was the second offer that they did not come to terms with. My clients decided to stand their ground and leave their offer at what was felt to be a fair price.

The offer died and we moved onto another property. Guess what! The offer we wrote on this one, is one of three offers. The listing agent has said that ‘they are all pretty close in price’ and wants us to come back with our ‘highest and best’. On this offer, we came in high to start hopeing to have a better chance from the beginning.

They know about appraisers, they know about future value, they know about what else is on the market, they know this is one that hasn’t been on the market too long… they are as educated as they can get. This one comes down to whether they ‘love’ the house and have to have it. We will see how this one plays out after I meet with the clients tonight. We can see how they fare in this frenzied market!