Bidding Wars Slow but Local Markets Still Competitive

While competition has moderated, Redfin reports that there is still
plenty of data, real and anecdotal, to show homebuyers are still highly
motivated
.  Redfin offers that were met
with other offers, so called bidding wars, have declined each month from the 75.3
percent incidence in March to 51.7 percent in November.  Even though these wars are less common,
Redfin reports its agents are finding buyers anxious to get a home under
contract before the end of the year, knowing that competition may increase in
the new year.

Among Redfin offices Seattle and Orange County (California) had the
biggest decline in competitive bidding with declines of 11.8 and 11.4
percentage points respectively.   Several
cities did see increases, however including Washington, DC (+8.2 percent); San
Diego (+5.7 percent), Baltimore (+5.6 percent), and Los Angeles (4.3 percent).

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

Redfin says that when it comes to
winning offers money isn’t necessarily everything.  Buyers sweetened bids with offers of all
cash, waived financing contingencies, waived inspections, or included a cover
letter with the offer.  These strategies
were used more in November than in October. 
While the numbers of waived contingencies are not large (except in San
Francisco and Boston where 26 percent and 15 percent of offers respectively
waived financing) cover letters are a frequent tactic with an average of 35
percent of buyers including one in their offers across Redfin’s 22
markets.  In Orange Country, and San
Francisco that frequency soared to 83 and 61 percent and was above the national
average in San Jose, Boston, Seattle and Los Angeles.

“Homebuyers who failed to get an
offer accepted early in the year have been stockpiling down payment money all
year long,” said Amber Hancock, manager of Redfin’s San Francisco East Bay market. “They’re jumping
back in this time as better qualified, more confident competitors, taking
advantage of the easing late-fall market.”

Home sellers are just sitting around
waiting for offers to land in their laps. 
Redfin agents across the country report that following this year’s
dramatic home price appreciation, some sellers are purposely pricing their
homes well below the market rate
, confident that they will attract multiple
bidders and the price will escalate well above asking. One Boston area home
seller who did this had an open house for his multifamily and had a line of
dozens of people waiting outside the door to get in, He received 62
offers
.   

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

Article source: http://www.mortgagenewsdaily.com/12232013_sales_home_prices.asp

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