Should We Sell or Buy First?
Date: Tuesday July 22, 2008Posted in: multiple offers, home, buyer's market, housing market, seller's market
I often have clients ask, “Should we find the house we want to buy prior to listing our house on the market?” And the answer depends on what the real estate market is doing. For example, we currently have a buyer’s market with a large number of homes listed. So, instead of jumping into a purchase that is contingent on the sale of the buyer’s home, it is much better to sell the home first. This is because it could take many months and possible price reductions until the home is sold. Not only will there still be a good supply of homes available for sale when the home is sold, but the person who has already sold their home has much more leverage in the negotiation process in their next purchase.
Now consider the seller’s market we had a few years ago. There were few homes available for purchase and those that came on the market were often sold very quickly with multiple offers. In that kind of market, it’s advisable to find a desirable, affordable house and put in an offer that gives you time to attract a good offer on your current house.
Also keep in mind that if you’re selling high, you’re probably buying high and if you’re selling low, you’re buying low. Don’t try too hard to time the market when you are buying and selling in the same type of real estate market.
Chasing that Elusive Downwardly Adjusting Market
Date: Saturday June 28, 2008Posted in: real estate, multiple offers, listings, housing market, pricing, list price
In conversations with home sellers here in south Santa Clara County, it is important to remind them of the potential of loss in equity in this downwardly adjusting real estate market. Sellers still want to “test the market” by pricing their homes a little higher than the latest comparables are indicating that they should be priced. After the “test” confirms that they are priced too high, they will then lower their list price. This is called “chasing the market down.” Every day a seller chases the market, they may be losing equity.
An important concept to understand in this type of real estate market is that the most competitive price often sells first. The seller who sells first is the seller who jumps the market and is the most competitively priced. That seller receives the highest possible price at that point in time.
The homes that are selling quickly in south Santa Clara County are the homes that attract the attention of buyers and Realtors alike due to their aggressive pricing. These homes are receiving multiple offers and often are selling for over list price. The sellers in these cases sell early during the adjusting market and have more options later. They can stop chasing and relax.
Isn’t it ironic?
Date: Monday May 5, 2008Posted in: real estate, multiple offers, Morgan Hill, real estate buyers, buyer's market, San Martin, Gilroy, MLS, median price
Several years ago, home buyers:
- were desperate to buy anything that could hold up a roof
- would offer well over list-price, especially when competing with other offers
- would purchase the home in as-is condition
- would have no contingencies in the contract
Fast-forward to 2008. Buyers are now paralyzed. It’s ironic because:
- there is a record amount of inventory to choose from
- sellers have dropped their list prices, and in many cases by hundreds of thousands of dollars
- interest rates are still low
- sellers are accepting terms that meet the buyer’s needs
Here in south Santa Clara County, average and median prices are below the average and median prices of single family homes during the fourth quarter of 2004. Currently for Multiple Listing Service (MLS) Area 1 (Morgan Hill, San Martin and Gilroy), the average price of a single family home is $723,004 and the median is $660,000. In 2004 Q4, the average was $734,250 and the median was $668,000. Just for reference, the peak average price for MLS Area 1 was $917,811 in the third quarter of 2006. And the peak median price for MLS Area 1 was $805,000 in the second quarter of 2006.
If you are contemplating a real estate purchase, now is a great time to buy in south Santa Clara County!
