The real estate market that we have had on The Peninsula since the first of the year has definitely benefited sellers. There has been a very low inventory of available properties for sale, and that has been coupled with a very high demand caused by our strong jobs market. Sellers routinely are getting much more than their asking price. Compared to most other parts of the state and country, our local market is very unusual.
The current real estate market has been very difficult for buyers and for the Realtors that represent them. Realtors have difficulty locating properties for their clients. When a Realtor finds a property suited for their buyer, they go through all the steps required to make an offer to purchase for their clients, and routinely do not get the property. It can be extremely frustrating for the potential buyer and the salesperson. Often two, three, four, or more offers are written on various properties over an extended period of time. The process is a lot of hard work for the client and the Realtor, and often yields no results.
Our competitive, or hot, market has been responsible for conditions that normally do not exist in a more balanced market. In anticipation of multiple offers and overbids it has become routine for sellers to set a date for accepting offers. On this date all of the offers are reviewed and normally the highest or strongest offer is accepted. In addition, most sellers are looking for a strictly “as is” sale. This has lead to buyers making offers that contain no property condition or inspection contingencies.
Routinely offers are made at prices significantly above the asking price with absolutely no contingencies: no financing contingency, no appraisal contingency, no inspection contingency, no property condition contingency, etc. In a highly competitive market with multiple buyers competing for the same property, buyers are doing this to make their offers more attractive.
Sellers, and their agents, have expected multiple offers, high overbids, no contingencies, etc. to be the normal and routine situation. Consequently the majority of listings have specified an offer date, required that all disclosures be approved in advance, and required that sales be “as is”.
We think that most people would agree that a more balanced market would be more desirable. A balanced market, one where there is a somewhat proportionate number of properties for sale and buyers for those properties, is a lot less stressful. Real estate markets are cyclical and regularly change over time. These changes normally come about gradually, but on occasion can happen quickly.
Just recently the inventory of available homes for sale has increased significantly. At the same time fewer listings are setting offer dates. This is a trend worth watching and could well be the start of a cycle toward a more balanced market. There will always be people who need to sell, and there will always people hoping to buy.
This article was published in the San Francisco Examiner.
Articles are written by Eric Ruxton and Larry Aikins, owners of Terrace Realty, Inc. and Terrace Associates, Inc. in Redwood City. Terrace has been in business more than 55 years and in addition to being an independent Brokerage Company, also owns and operates rental properties.