Ladies and Gentlemen, mothers, fathers and children of all ages,
please direct your attention to the center ring.
back from an extended absence,
returning to critical acclaim,
and the jubilant cheers of its many fans,
I GIVE YOU:
I don't have any statistical data to back me up on this one, but in talking to real estate agents over the past couple of weeks, I was pretty taken aback to hear multiple stories of buyers and sellers finding themselves in multiple offer situations (negotiations in which more than one buyer wants to purchase the same property... bidding wars).
Bidding wars were well known in my practice, and in the larger marketplace during the go-go or boom years. Buyers were so desperate to win a Seller's acceptance that they were paying more than the asking price, and waiving protective contingencies such as inspections, mortgage financing and sale-of-other-property requirements.
I had not, until just recently, seen one in many, many moons. But now, it seems our old friend has returned. Is this a good omen for the markets?
Yes. Clearly, yes. Multiple offers indicate that at least some Sellers have hit the right price point, low enough that Buyers are recognizing value opportunities and are confident enough to go forward with purchase offers.... in numbers large enough that more than one Buyer is ready to pursue these "right" properties.
Multiple Offers make for winners and losers. Winners get to go forward on their deals. Losers, burned by the experience are (typically) quicker to move on to the next opportunity and will likely "pull the trigger" on an offer sooner, lest they miss out again. Other Buyers will also hear of these developments, which will also colour their perceptions of the market, add to their confidence levels and when this happens, the overall market velocity will (in my estimation, anyway) quicken.
So what properties are the subjects of these bidding wars. Again, I have only anecdotal evidence to work with, but for the most part, I am hearing about multiple offers following in reaction to significant price drops for two specific types of properties; north side condominiums, and recently built but never sold single family homes (mostly selling at or near $1 million). Again, this is only anectdotal, but the pattern seems pretty apparent from my vantage.
For me, the only question that remains is "who are the sellers?" If these are resales, then the news is even better. The market might be finding its bottom, and perhaps these particular sellers have even "under priced" their homes in relation to it. If these multiple offer deals have been mostly REO and pre-foreclosure sales, then perhaps the market still has a bit farther to go before reaching that bottom.
I am still seeing significant price differentials between otherwise comparable REO properties and conventional resales. Until that gap is bridged, non-distressed owners will continue to be at an ongoing disadvantage to the owners of the distressed properties.
The main point however remains. Whatever the circumstances of the Sellers, several (and hopefully, soon, many others) are finding that not only is there A BUYER out there who wants their property, there are actual SEVERAL BUYERS who do.