Thursday, April 16, 2009

Multiple Offers in a Buyer’s Market is Not an Anomaly

Posted by The Jill Smith Team at 7:04 PM
The Millburn-Short Hills area is experiencing a buyer’s market for the first time in many years. Area home prices have been on a steady increase since 2000, with a dramatic spike in 2005 and 2006. They have been on a steady, albeit significantly less dramatic, decline since 2007. Prices are, however, expected to stabilize, if not this year, by 2010. Lower housing prices and a large inventory of available homes in all price ranges have created a buyer’s market. However, a buyer’s market does not necessarily ensure buyers have the upper hand.

The listings that defy the buyer’s market share two characteristics: they are priced aggressively and they are updated throughout. Buyers now demand a house to be renovated throughout; updated kitchen, updated baths, tastefully decorated and freshly painted. They are willing to pay a fair price for a good house but do not intend to spend cash on renovations and updates. The problem for buyers is they are all looking for the same thing. The houses that are priced well and updated are often receiving multiple offers. Buyers believing you never pay full price in a buyer’s market are typically caught off guard when they are in a situation of making an offer on a house along with three other buyers.

The best way to handle a multiple offer situation is to avoid one altogether. When a good house comes on the market make an appointment to see it right away. If it really is a great house for your taste and needs make an offer right away. Try to get it under contract before another offer can materialize. If you do find yourself in a multiple offer situation, carefully consider how much you like the house and how much you are comfortable paying for it. You may want to consider:
  • How long do you expect to live in the house? If you plan on staying for several years (4 or 5 years) you can feel relatively secure in our market area that you will at least break even if you sell.
  • How much do you like the house compared to other houses you’ve seen? Did it take several months to find the house that you want to make an offer on? How many houses have matched your search criteria in the past?
  • Will you feel ok if you lose the house by a difference of say for example, $10,000? But will you regret not offering $5,000 more than you did?
No one should pay more than they are comfortable paying but you also don’t want to regret losing out on a house that you really love over a few thousand dollars.

Whether it’s a buyer’s market or a seller’s market, multiple offers can be a stressful process. Be prepared and don’t let current market conditions prevent you from making a strong offer. Prices are lower than previous years, don’t miss out on getting a great buy. Yes, there will be other houses but more than a few buyers have regretted missing out on the one that got away especially in a buyer’s market.

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