Bidding Wars Slow but Local Markets Still Competitive – 62 Offers?

While competition has moderated, Redfin reports that there is stillrnplenty of data, real and anecdotal, to show homebuyers are still highlyrnmotivated.  Redfin offers that were metrnwith other offers, so called bidding wars, have declined each month from the 75.3rnpercent incidence in March to 51.7 percent in November.  Even though these wars are less common,rnRedfin reports its agents are finding buyers anxious to get a home underrncontract before the end of the year, knowing that competition may increase inrnthe new year. </p

Among Redfin offices Seattle and Orange County (California) had thernbiggest decline in competitive bidding with declines of 11.8 and 11.4rnpercentage points respectively.   Severalrncities did see increases, however including Washington, DC (+8.2 percent); SanrnDiego (+5.7 percent), Baltimore (+5.6 percent), and Los Angeles (4.3 percent).</p

Three-quarters of the homes sold in November in San Jose and 54.3rnpercent sold in San Francisco sold at their list price and home-sellersrngetting premiums of 1.8 percent and 0.4 percent respectively.  Homebuyers in Chicago and in Orange County werernable to negotiate selling prices that were an average of 4.4 percent and 4.3rnpercent below listing prices. </p

Redfin says that when it comes tornwinning offers money isn’t necessarily everything.  Buyers sweetened bids with offers of allrncash, waived financing contingencies, waived inspections, or included a coverrnletter with the offer.  These strategiesrnwere used more in November than in October. rnWhile the numbers of waived contingencies are not large (except in SanrnFrancisco and Boston where 26 percent and 15 percent of offers respectivelyrnwaived financing) cover letters are a frequent tactic with an average of 35rnpercent of buyers including one in their offers across Redfin’s 22rnmarkets.  In Orange Country, and SanrnFrancisco that frequency soared to 83 and 61 percent and was above the nationalrnaverage in San Jose, Boston, Seattle and Los Angeles.</p

“Homebuyers who failed to get anrnoffer accepted early in the year have been stockpiling down payment money allrnyear long,” said Amber Hancock, manager of Redfin’s San Francisco East Bay market. “They’re jumpingrnback in this time as better qualified, more confident competitors, takingrnadvantage of the easing late-fall market.”</p

Home sellers are just sitting aroundrnwaiting for offers to land in their laps. rnRedfin agents across the country report that following this year’srndramatic home price appreciation, some sellers are purposely pricing theirrnhomes well below the market rate, confident that they will attract multiplernbidders and the price will escalate well above asking. One Boston area homernseller who did this had an open house for his multifamily and had a line ofrndozens of people waiting outside the door to get in, He received 62rnoffers.   </p

Sometimes buyers find it necessaryrnto act like Big Buy customers on Black Friday eve.  Redfin said in the summer of 2012 somernhomebuyers camped out in tents for weeks at Shapell’s Gale Ranch community inrnSan Ramon hoping to buy one of a handful of new homes being released for sale.  Now, forbidden this time from raising tents,rnprospective buyers are sleeping in their cars at another Shapell development nearby,rnhoping for a crack at six homes priced under $800,000.

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