Buying in a Seller’s Market

If you are someone who doesn’t follow the housing stats or obsess over the local real estate market, then you may not have heard the latest news in the Los Angeles area– we are experiencing (gasp!) a seller’s market. How is this possible? It’s pretty simple: with the economy improving and interest rates staying low, buyers are finally feeling confident enough to get back into the market. Combine that with a five-year inventory low and list prices that reflect the new market value, and you get two things – multiple offer bidding wars and rising prices.

What this means is that it is now the buyer’s turn to come to terms with the “new normal” in the housing market. The days of lowball offers after weeks of consideration are over. In order to get an accepted offer from a seller, buyers need to move quickly and be prepared to offer a fair market value. Just this past week, I had an experience with some buyers that reinforces the importance of preparing yourself for the buying process in a hot market. Last weekend, I met a wonderful family while holding an open house on a beautiful new listing in Glendale. After spending some time getting to know them and going though their wants and needs, I set up showings for later in the week. On Tuesday, we saw an amazing new listing in La Canada that they loved and were interested in putting an offer on. The only problem – it already had a full price offer despite only being on the market a few days. Being at the beginning of their home search, my buyers did not feel comfortable getting into a multiple offer situation, and they were operating under the common assumption that they would not have to actually pay full list price in order to get an accepted offer. Unfortunately, those times are over for homes that are priced appropriately and show well. My buyers simply weren’t ready, and we walked away from the house.

On Thursday, I took my buyers to see a home that I thought they might be more comfortable with. This house had been on the market for 308 days and needs extensive cosmetic updating – including the removal of “granny-esque” wallpaper from every room in the house and new flooring throughout. In the past, with these types of houses, buyers typically have more time to think about their offer, and more room for negotiation of the price. My buyers were very interested, and asked to see the house for a second time on Saturday. Imagine my surprise when I called the agent Saturday morning only to find that the home had just gone into escrow above the list price after receiving multiple offers. This home had not had a price reduction since September, and after sitting on the market for over eight months, it finally sold for more than asking.

So it’s back to the drawing board for my buyers, who hopefully learned some valuable lessons this week. This situation is an excellent example of the type of scenarios buyers often need to experience in order to better educate themselves about the market. If you are considering buying a home this spring, the best thing you can do to prepare yourself is to find a qualified agent that can talk you through the process and guide you to an accepted offer. If you have any questions about surviving the Los Angeles seller’s market, feel free to contact me!