Why buyers don’t always take the highest offer

You might be surprised to hear that sellers don’t always take the highest offer on their properties. It would be logical to get the most bang for your back, but as this article outlines, there are more factors at play in today’s market.

In that specific example, the seller and their agent took a middle offer because it was all-cash, and that was the only way to ensure the deal would go through without having to worry if the appraisal would come in. They sacrificed a bit on the price (possibly) to make sure the house got sold.

From a seller’s perspective, taking a lower offer could be for any number of reasons. It could be because they want to counter up a lower offer because they have better financing or somebody waives the appraisal contingency. It could be because the letter they received from the prospective buyer was so engaging that they wanted those people to own the home, regardless of the price difference. It could even be because they’ve met the buyer and their family and just felt a connection to them.

From a buyer’s perspective, this means there’s an opening in the modern real estate market. If you don’t have the highest offer, you’re not always on the outside looking in. If you put more of a sincere, human touch on your pitch to buy the house, sellers might be more likely to sell to you!

It goes both ways. Real estate transactions involve a lot of paperwork, money and bartering. But when it comes down to it, having the human touch that a buyer seeks might be all you really need to leapfrog other offers and land the house of your dreams!

A great listing agent will go over all the pros and cons of each offer and provide reasons why one offer may be better, and give recommendations on counter strategies. At the end of the day, it is always the seller’s choice on who they choose to buy their home if they have more than one offer.

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What is the most expensive zip code in CA?

If you had to guess which California city has the most expensive real estate, what would you say? San Francisco, maybe? Certain parts of Los Angeles – remember the show 90210?
Watkins-Cartan House, 98 Alejandra Ave., Atherton, CA
Nope, the honor goes to the 94027 zip code – Atherton, CA. For those not familiar, Atherton is right above Palo Alto and the average cost of a home there is…wait for it…$6.17 million. According to Zillow, home values in Atherton reached a low point in summer 2009, dipping below $3 million.
I asked my friend Jay Vorhees of JVM Lending what kind of average income would be necessary to afford a home in Atherton at 25 percent and 50 percent down.
Given that the average income in Atherton is about $250,000, I was wondering how exactly a median home price of $6.17 million was affordable there! Here’s his assessment:
Assuming no consumer debt, a 4.0% rate and a 42% debt ratio, with 25% down, PITI would be about $29,000 per month (rounded). This would require $69,000 of monthly income or $828,000 annually.
With 50% down, PITI would be about $22,000 per month (rounded). This would require about $52,500 of monthly income or $630,000 annually.
So how does the average income earner in that area afford Atherton? Most likely people have had these homes for years, thus the lower income. For new purchases, stock options from IPOs are not usually included in your annual income, thus allowing the the nouveau riche of Silicon Valley to buy with cash or put 50% or more down.

December/January housing market is stronger than you think

December and January are usually busy months with holidays, vacations and school breaks. But, contrary to popular belief, that does not mean the housing market slows down. On the contrary, actually!

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Based on 2015 numbers, listing your home in December and January actually give you a benefit. You can garner multiple offers and close above list price. In Spring, you get the price increase but also more houses listed, which lead to many more choices for buyers, making multiple offers rarer (or, you’ll get fewer offers at least, like 3 vs. 8 in Dec./Jan.).

If you’d like to take advantage of this market in December and January, reach out to me. I’d love to help you navigate the holiday season weather you are selling or buying a home or just consult with you on the best overall strategy for you!