Our Autumn real estate market is much like the fall foliage: it’s intense, and doesn’t last long. For the next several weeks we will see an increasing number of properties appear during this concentrated fall market between Labor Day and Thanksgiving. Generally this is a good time for buyers, with the number of new properties mostly exceeding the number of new active buyers. Here is my prediction for the fall market: that list prices will be higher than we’ve seen recently, and that the difference between list and sales price will start to diminish. My guess is that we’ll see fewer cases of truly wild overbidding. But they won’t go away completely: I just heard of one on Marin, below the circle, that I hope will be a good sign for the new listing I’m working on above the circle, also on Marin. This one had lovely public rooms with original wood wainscotting, and a truly original kitchen (with a great Wedgewood stove on tall legs!). It was set somewhat back from the busy street, and had a flat back garden. Upstairs was less satisfying: mostly a sixties addition, a mix of finishes, and many aluminum windows. Listed for $1.050M, I hear it received 7+ offers and is in contract around $1.5M.
I’m delighted to have just gotten another buyer into contract with their first offer, and in competition. Even here in the East Bay, where many properties are receiving multiple offers substantially over the list price, it can be done! If buyers are clear about their goals and willing to follow my recommendations for conducting their due diligence while still making their offer attractive to the seller, they can succeed. And yes, lots of cash helps!
On my last listing, a three-bedroom home located near campus, downtown and Gourmet Ghetto but on a busy block of Oxford, six of the ten offers were all-cash. But interestingly, the successful offer was not one of the all-cash offers, nor was it the highest offer. I recommended that my sellers accept the winning offer based on my confidence in the local loan broker involved, someone I had used numerous times to represent my buyers. As it was, my clients accepted an offer $300K (35%) over the list price, and I was surprised that there was more than one offer in that range. But the high offer was written $200K higher still–but with risk.
The background story is an object lesson in the importance of “seriously local” – not just the tag line of my brokerage, but how real estate works here in the East Bay. Had the agent who wrote the highest offer been a member of our local real estate community, his clients might well now own that property. But he did not write the offer the way most Berkeley agents would write the offer, nor was it well-documented. It was written as all-cash, but in fact was contingent on the sale of another property. He expected that a very high price would rule the day, regardless of a very long inspection contingency (his was one of only two offers with ANY inspection contingency). He assumed we would counter out any unsatisfactory terms. But as I explained to him, I would never shorten a buyers’ inspection contingency. Denying a buyer a contingency that they have asked for in a contract has been the basis for numerous lawsuits. Buyers must be motivated themselves to either rely on the reports provided by the seller, or better still, do their inspections in advance of submitting their offer. That is what both of my last buyers did, and in each case they both were able to fully inspect the property, put inspection reports in context, and document to the seller that they had satisfied themselves as to the condition of the property. While it requires a commitment upfront on the part of the buyer, to me it’s a much more reasonable approach than simply waiving the inspection contingency. Better still: a more balanced market. Here’s hoping that’s what this fall market will bring!