I listed a
townhome in Lakewood today for $168,000.
Twelve hours later, I have had 22 showings, six offers in hand, several others on the way and a bidding war
is in progress as I write this at 8:45 in the evening.
Will it ever
end? The shortage of entry-level housing
product in the metro area is amazing to behold.
Five years ago this week, there were 6,774 homes for sale in the Denver
MLS under $250,000. Today, there are
558.
To drill
deeper, try this on for size. As I just
mentioned, right now there are 558 homes on the market priced below
$250,000. There are 660 homes in the
Denver MLS priced over $1 million. So there is more million dollar inventory in
the Denver MLS than entry-level inventory.
That is
simply unprecedented.
Now let’s
flip it over and look at homes currently under contract. Below $250,000, there are 1,948 homes
currently under contract. Above $1
million, there are just 118.
So while the
number of homes for sale below $250k and above $1 million are basically the
same, there are almost 17 times as many homes under contract below $250,000 as
there are above $1 million.
If you aren’t
tracking on this, let me make it simple.
There is nothing for sale under
$250,000 and there are literally thousands and thousands and thousands of
prospective buyers racing around town trying to find something, anything, in
this price range.
I listed a
home in November for $244,000 in a good part of Wheat Ridge that drew a dozen
offers in four days. I listed another
sub-$200k home in October that had 34 showings and a top offer $27,000 over
list price. In fact, when I list
anything below $250,000 these days, I pretty much block out two solid days on
my calendar because all I’m going to do is take calls from buyers, answer
questions from agents and do my level best to skillfully manage the bidding
wars that are almost certain to break out.
Is it all
about top dollar? Sometimes, but not
always. It's important to know who is in your transactions. That means I want to know
who the buyer is, why they have an interest in this neighborhood, how they met
their agent, and of course, how much commitment their offer shows.
I want to
know about the agent. Does the agent
sell homes, or is he or she a part-timer?
Can they demonstrate a track record of solving problems? How did they meet the buyer? How well are they educated? Have they written offers on other homes? Are they prepared to waive appraisal
contingencies, jack up the earnest money, take the home “as is”, or come up
with other ways to make their offer stand out?
Who is the
lender? Local? Or some obscure Internet company? You can offer $1 million for my $168,000
listing and it doesn’t matter if it never closes. Show me proven results.
There is
nothing about this enjoyable for buyers, or agents. Including the listing agent. About the only ones having fun are the
sellers, who are cashing out with big profits and feeling pretty good about the
whole thing.
As an agent,
managing a feeding frenzy / barroom brawl is hard to do, especially if you are
legitimately trying to give everyone a fair chance while doing what it takes to
fulfill your obligations to your seller.
Namely, to get the best offer from the strongest buyer, ethically, while
mitigating risk and protecting your seller’s interests.
Tomorrow, we’re
going to sift through a pile of offers and have a series of conversations with
agents who are just as tired of showing houses as their entry-level buyers are
of chasing after them. Ultimately, there
will be one winner and a disgruntled group of frustrated also-ran’s who once
again gave it their best shot, only to get nothing.
For
prospective sellers, I want to caution you.
It will not always be this way.
In fact, at
some point a market transition is going to happen. And when it does, I suspect we’re going to
see a whole lot of inventory show up very quickly, because when people sense we’re
near a top, everyone wants out. I’ve
seen it before, and I know it will eventually play out this way again.
If you
choose to wait a while longer, you may pick up a few more dollars. But if you overplay your hand, if you want
until the market tops and then tips the other way, you will miss the best
seller’s market in the history of Denver.
The best
time to buy is when no one is buying.
And the best time to sell is when no one is selling. End of story.
