2015, a year of living in a seller’s market

2015, a year of living in a seller’s market

How well do exclusive buyer’s agents do, in the face of a tough seller’s market? Here are results for the hardest seller’s market we have faced, ever!

gradeOur report card for the first three quarters of 2015:

  • No clients waived their home inspections in order to buy a house.
  • No clients waived mortgage contingency unless they had cash resources to close without a mortgage.
  • All but three of our clients bought in bidding wars.
  1. On four occasions, we were told that our client’s accepted offer was not the highest offer.
  2. On six of those occasions, we were told that the letter we wrote, with our client’s input, made the difference.
  • Total amount under original asking negotiated by clients not in bidding wars: -$151,585
  • Total amount negotiated after inspections: -$26,000
  • Number of properties we identified for our clients before they were listed: 18
  • Towns served: Acton, Cambridge, Somerville, Arlington, Belmont, Boston (South End, Brighton), Medford, Melrose, Natick, Wakefield,Waltham, Westwood, Woburn, and Quincy. 

Asking prices are created by the seller and/or his or her agents to get the seller their best price. In the current market, many asking prices are set artificially low, so that buyers will begin to bid against one another. It is well-known that people pay more when they get into competition. This kind of irrational spending is what is fueling the rising prices this year.

cautionEconomic danger! We do market studies to set a “top rational price” for our clients before they make any property offers. In this process, we will search for similar properties by size and location; then we adjust for differences in size, location, and condition. This year, it is becoming common to find one property that sold significantly higher than others that sold the same time, in the same or similar area, in similar condition. This buyer (not our client!) overpaid by anywhere from $30-100,000. If the market stops going up, that buyer will be the most unhappy.

Because of the auction environment of bidding wars, some buyers are getting caught up in the “win at all costs” mentality. Part of our job is to keep our clients from being the people who overpaid because they lost their head.

Benefiting from seller’s mistakes: After one weekend on the market, buyers begin to ask “why didn’t this sell?” Our buyers benefit from our skills at evaluating properties that did not sell quickly. Some of those did not sell because the seller made a mistake when marketing the property. (Common mistakes include overpricing, not staging, not allowing enough time to let people see the house, or otherwise turning people off.) When this happens, the house may later sell for less than it could have. We have succeeded in finding these for our clients.

house=moneyWhat is a bargain and what is a money pit? Some of the properties that didn’t sell quickly have costly problems. Although inspectors know even more about houses than we do, our agents find many costly problems on routine house-hunting visits. Armed with this information, our buyers know the difference between a bargain and a money-pit before making an offer and paying for a home inspection.

Asking prices are created by the seller and/or his or her agents to get the seller their best price. In the current market, many asking prices are set artificially low, so that buyers will begin to bid against one another. It is well-known that people pay more when they get into competition. This kind of irrational spending is what is fueling the rising prices this year.

Are we in a bubble? Yep. Will it burst? Yep. When? ……

Hopeful signs:

Supply-demand-economicsSmall changes in interest rates will make some people panic. That will reduce demand and also make sellers more cautious about reduced demand.

International buyers have been slowing down. Most are in the luxury buying market, choosing high-end condos in Boston and Cambridge. Chinese and Russian speculators are not as common as they were two years ago. This is also reducing demand.

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