The good news is that we’re selling lots of homes. The bad news is that we’re selling lots of homes. While 2011 will likely be one of our best sales years on record, the rush to buy Las Vegas homes at these prices is creating multiple offer situations. The resulting competition usually spells higher prices for the buyer who’s offer is eventually selected.
Jackie and Kaden just had their offer rejected at $14,000 above list price. It was a good, clean offer. And one of 14 offers presented.
Some homebuyers feel that the banks are staging “bidding wars.” It can feel like this, but it’s simply not true. If you had a home to sell and 14 buyers wanted it, would you write 14 individual counter offers and negotiate with 14 parties? Or would you take the approach the banks take, and ask for everyone’s “highest and best” offer, then choose? In a bidding war, the price keeps increasing. In a “highest-and-best” situation, each party has one opportunity to present their best offer. That’s it. There will be no counter offers flying back and forth. The bank will pick the offer that meets its objectives.
Of course, Jackie and Kaden knew this going in. I educate my clients so there are no surprises. They had a chance to offer more. I had advised an offer of $110,000, which was closer to market value. But they offered what they were comfortable with, and didn’t get their hopes up. We’ll find another home.
Allen is in a similar situation. He has already offered $1500 over list price, and we just received a request for his “highest-and-best” offer. In this case, his offer is right at market value. I will recommend that he raise his offer no more than $1500.
There are many homes on the market, but there are buyers lining up to buy nice REOs in good condition. Don’t be surprised if you find that another buyer shares your same good taste. There is also a great deal of competition amongst buyers looking for investment homes that will provide cash flow. If you are looking at a home priced under $120,000, it’s likely that you will face competition if the home is in good condition. It’s almost certain you will if the home is 1-story or has a swimming pool.
If sales slow down later in the year, this should be the best time to buy – you might have your pick of homes at that time. But if sales continue to be this brisk, expect competition.