Happy day after Halloween! I hope not too many of you are in sugar shock from all the left-over candy. This was the second straight year where we only had 1 group visit my home, probably because there were so many organized events in advance.
The San Diego real estate market continues the same patterns we have seen for some time now. Our total inventory of available detached and attached homes now stands at 7,947 units on the market unsold. This total represents about half of our normal selection and much of it consists of newer short sales that could take months to process and are therefore not as attractive to buyers as either equity sales or bank owned properties, both of which offer a much faster trip through the escrow period.
On the detached home front, 5,512 homes are on the market as of today. 1,854 units opened new escrows last month and another 2,328 went "contingent" (short sales with accepted offers awaiting lender approval) during the month. The total of 4,182 new pendings and contingents means that we have about a 3 week supply of inventory and that prices are starting to increase. Offers must be aggressive and pre-approved to have a fighting chance, with up to 30 bids competing on many listings. I have begun to limit my real estate practice to showing only equity sales, bank owned properties or approved short sales because the frustration level experienced by all parties is tainting the home buying process.
On the attached property front, 2,435 units are on the market today. 965 went into new escrows over the past month and another 1,956 went "contingent" over the same period, meaning that 2,921 units went off the market which is about 20% more than we have available. This obviously creates difficult bidding situations and rising prices.
I am often asked by buyers what they can do to win a bidding war so we've created the list of suggestions below. Keep in mind we do not recommend any of these steps unless you are fully aware of the possible consequences.
Possible Options in
Multiple Offer Situations
(Not encouraged by this firm without full understanding in advance)
- Bid very aggressively on the price, at the top of your loan qualification or comfort level. In a strong seller’s market where inventory is low this could mean 10% or more above the listed price.
- Pay all cash or use a conventional loan with 20% or more down. FHA & VA loans are difficult due to the small down payments and loan requirements on sellers.
- Make a large good faith deposit (up to 3% of the purchase price).
- Do not ask for seller concessions.
- Request a closing less than 30 days away and offer to pay a per diem charge if you are late, or be prepared to accept one that the seller counters with.
- Offer to buy the property as is, without repairs if possible.
- Eliminate the appraisal contingency.
- Provide proof of the funds needed to close with the offer.
- Provide a loan pre-approval based on your credit report.
- Offer to remove contingencies in less than 17 days.
- Offer to pay for your own home warranty.
- Offer to pay some of all of the seller’s closing costs.
- Be prepared to walk away from out-of-pocket expenses for inspections and appraisals.
Many of these options involve risk on your part. Do not pursue any of them until you have a full understanding of the possible consequences you could face.
It looks like the tax credit will probably be extended and possibly expanded to include non-first time buyers over the next few weeks. Unfortunately, at least in San Diego, it has been very tough for first time buyers to take advantage of the credit due to the difficulty experienced in winning a bid.
I hope this helps and look forward to hearing from you soon...
Rick Ungar is a Certified Distressed Property Expert, solving the foreclosure issue one homeowner at a time. Contact us today to learn about the best options to preserve your credit and buy again soon.
