Auctions and the Highest Bidder 💰 – TBG Update 5/7
It is definitely a seller’s market right now. Properties that are uber desirable and attractive to so many buyers are basically going up for auction and getting sold to the highest bidder. We had two buyers go into escrow today – both for way over the asking price with no loan or appraisal contingencies. One of our buyers was the winner out of 18 offers. We’re spending our days talking to buyers who want to know what price they should offer. Every buyer needs to decide that number for themselves. Houses are getting sold to the buyer who wants it the most and so jumps ahead of the pack to win the auction. There is no way for us to predict how much someone wants a house and the lengths they’ll go to get it. The best advice we can give is to give it thoughtful consideration and to figure out a price that feels good whatever happens. If the offer is the best, then the buyer is so happy because he wanted the house so badly. And if the offer is not the best then the buyer is so happy because in their mind another buyer overpaid and our buyer chose not to. Buyers are nervous that they’ll be off by a small amount and then they’ll regret not getting the house for so little more. In real life, I don’t see that. In my experience, I would say that in multiple offer situations the difference in price between the highest offer and the next best offer is significant enough that in all likelihood the second best offer would not have matched that price. I find that in all the multiple offer situations, there seems to be one buyer who blows the others out of the water. It’s the people who are so scared to overpay that lose the house their first few times, and then they have regrets, and after they lose a few houses, they’re the ones who blow every other offer out of the water to finally buy a house. Buying a house right now in this market is tough…and often a lengthy process going through the multiple offer situation several times to “get” it from experience.
As for sellers, in order to take full advantage of the seller’s market, the house for sale needs to go on the market with the right combination of price and condition so that there’s a lot of interest and it becomes an auction where the house sells to the highest bidder. An auction only happens when there’s more than one person at the party. A real seller properly prepares their house for sale and prices it so that the price feels attractive to multiple people. A seller knows they have the right combination of price and condition from market feedback. With adjustment, every seller can choose to capitalize on this market.
I’m advising sellers who need to sell in order to buy that it might make sense to sell and rent (even though it’s so hard to move twice) in order to capitalize on the seller’s market now. It doesn’t make sense to rush into a purchase in this market. It also probably won’t work to write a purchase offer contingent on the sale of another house in this market. That doesn’t mean that it doesn’t make sense to sell. It just might be hard to sell and buy at the exact same time. There is opportunity to sell now. And it just might be smart not to do it concurrent right now.
I was baking Challah this week and before I braided the dough I took out a little book that was a gift from a dear seller, Carol, September 2011. It’s called “Aneini” and it’s a series of prayers to say at various life moments. The little book starts with a prayer to say when baking Challah. The prayer is about mothers wishing so many good things for their children and in my mind were those many mothers who lost their children last week in Meron. It’s unfathomably sad that those kids died. As I set my table for Shabbat, I rearranged flowers a seller, Leah, dropped off two weeks ago with the buds closed so they’d last a long time; they’re still beautiful. I’m so touched that lovely smart clients, Patricia and Eliane, who both bought and sold a house with us 4 years ago asked if their 17 year old daughter could intern in our office this summer (YES!).
We’ve been getting calls from sellers who go online and have the option of a company buying their home. They sign up to find out the “buy it now” price. Their email address, given to satisfy their curiosity about the offer price, turns them into a lead that gets sold to an agent. That system works fine only as long as the seller (and their sale) is not just a commodity to be traded but the end result is in the seller’s absolute very best interest.
I believe that real estate should be organically local, personal, heart warming, and genuinely human. I love praying from my little gift book ten years later and it will be a total honor to teach Patrizio and Eliane’s daughter what makes a real estate office run. I believe that a real estate transaction happens best when there’s a human connection and a competent human who sincerely cares about another human – most important the result of their sale but also consideration and care for their well being in addition to their bottom line.
There’s a race now for the online companies to capture the business. May the most competent and most caring ultimately win. So all the humans can live happily ever after.
Have an awesome weekend!