I closed a transaction this morning with clients whom I first met 753 days ago (March 15, 2010, to be exact). And while their case is extreme, there is no denying that it is taking buyers much longer to write successful contracts because of the lack of inventory and the intense competition.
I have other buyers right now I have been working with since January of 2012; December of 2011; October of 2011; and March of 2011. I have had buyers drop out of the market this year after spending months pursuing limited inventory. And I have had sellers who failed to successfully sell their homes in 2010 or 2011 find full price offers coming their way in days (not weeks or months) so far in 2012.
Demand changes the rules, and the rules in this market have changed.
The logical market is over. If you see a home listed for $200,000, and the recent comps are $191,000, $193,000 and $194,500, you might find it “logical” to write an offer at $195,000 (or perhaps less). Here’s the problem: time and again, by the time you write that offer someone else has written one at $206,000. Game over.
I do not advocate offering more for a home than it is worth. And for years, I have built a very loyal clientele by injecting huge doses of logic, common sense and patience into the home buying process. It’s simply too big a decision to get wrong.
But here’s the thing – the numbers always tell a story. And the numbers in this market (more buyers than sellers, hardly any foreclosures, and interest rates in the 4’s) make the buying decision so obvious to people that it’s easy for buyers to write “over list” offers.
It’s okay to take your time. It’s okay to be patient. But when you see what you’re looking for at a price that isn’t crazy, you had better be prepared to strike fast. Because as you read this, someone else is already writing that offer.
