In many areas of Southern California homebuyers are seeing a return of the “bidding wars”. Particularly hard-hit are those buyers in the low to moderate price range. The key factor bringing a return of the “bidding wars” is the low inventory of homes for sale in many market areas. Aggravating the situation is the fact that homebuyers are finding themselves in direct competition with real estate investors that typically pay cash in a transaction.
The California Association of Realtors said last month a dramatic shortage of homes for sale in California has created an especially tough market for first time buyers with nearly 6 in 10 homes selling with multiple offers. 57% of homes sold in the second quarter got multiple offers, the highest percentage in at least the past dozen years, according to the Association’s 2012 annual housing market survey, released in November. Each of those homes received an average of 4.2 offers up from 3.5 offers in 2011. The seller’s market has led to more properties being sold at or above the list price with 41% of home selling without a price drop the highest since 2005 and up from a long time average of 32%.
With this economic reality homebuyers are facing some tough choices. The potential buyer should make every effort to present the strongest possible offer to increase the chances of the buyer’s offer getting accepted. Unfortunately, in the current market asking the seller to pay closing costs decreases the chances of an offer being accepted. All contingencies to the offer need to be evaluated for their potential effect on the seller and the relative strength of the offer being presented. Contingencies that decrease the chance of an acceptance should be avoided.
The best course of action or a home buyer in today’s market is simply one of patience. Avoid looking at houses that are in excess of your budget as the days of sellers accepting a lowball offer are gone. The potential buyer should look at as many acceptable houses as possible and submit strong offers. The realistic in today’s market and understand that some of your offers are not going to get accepted. While this can be discouraging, exercise continued patience and you will be rewarded .