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  • Real Estate Advice: Contingent Offers

    Posted on November 22nd, 2013 acimetta No comments

    In the South Bay, as in much of the country, we are currently in a Seller’s Market. There is a lack of inventory and a lot of buyers. It’s simple economics: supply and demand. High supply and low demand is a Buyer’s Market; low supply and high demand is a Seller’s Market. And when supply and demand are relatively on par, we have a balanced market.

    Seller’s Market
    So if you’re a buyer in this environment, you have some challenges to face. You will be pitted against other buyers who are paying all cash or who are making large down payments or who are willing to shorten or remove contingencies quickly. You need to make your offer as competitive as possible if you want the seller to choose your offer over the others.

    Contingent Offers
    But for some buyers it can be even more complicated than this. Some buyers need to sell their home before they can buy a new home (their “upleg”). They are taking the money from the proceeds of the sale of their house and putting it toward the down payment for their new home. Consequently, the offer they make is contingent upon the sale of their home. It’s hard to compete with other buyers when you still have to get your home on the market, find a buyer, and close escrow. Most sellers are going to want as close to a sure thing as possible. An offer contingent upon the sale of the buyer’s property is not a sure thing. So in this seller’s market, it behooves a buyer who has to sell their home to get their home on the market first and lock in a buyer, and then make an offer on an upleg. The key is to sell their home contingent in that way letting the buyer of their property know that the seller is allowed to cancel the deal if they don’t find an upleg.

    For example, Bob is selling Home A and wants to buy Home B. Bob should list Home A and sell it contingent upon buying Home B. Bob secures a buyer for Home A and the further along he can get in the escrow of Home A will improve his chances of getting an offer accepted on Home B. Here are some of the scenarios:

    Bob does not have Home A on the market and he makes an offer on Home B.

    Bob has Home A on the market and he makes an offer on Home B.

    Bob has an accepted offer on Home A and makes an offer on Home B.

    Bob is in escrow on Home A and makes an offer on Home B.

    Bob is in escrow on Home A and the buyers of Home A have removed all their contingencies. Bob makes an offer on Home B.

    As you can see, the seller of Home B will probably prefer the last scenario. The buyers for Home A are locked and loaded, and Bob is ready to move forward in an escrow on Home B with less risk than if he didn’t even have his home listed for sale yet. The further along you are in the process of selling your home, the better chances you have of getting an offer accepted on your new home.

  • Taking the Real Estate Market’s Temperature: A Seller’s Market

    Posted on June 25th, 2013 acimetta No comments

    For the past several months in the South Bay, we’ve been experiencing a frenetic market where listings are sold in days, if not hours. If you blink, you miss them. Multiple offers on properties have effectively pushed prices up quickly. And there is no sign of a slow down yet. With that being said, this is a great time to be a seller. If you’ve been thinking about selling, you may want to take advantage of this climate: very little competition and desperate, aggressive buyers.

    If you wait too long and put your home on the market when everyone else does, then buyers will have their pick of their homes and prices will begin to stabilize. However, if you remain ahead of the curve, you will benefit from this buyer frenzy we are experiencing.

    If you would like to discuss your options in more depth, don’t hesitate to contact me at 310.542.9054.

    The chart above represents the Properties for Sale vs. Sold Properties vs. Properties in Escrow (pending) in North Redondo (zip code: 90278) for the time period of December 2012 – May 2013. You can clearly see that the number of homes for sale have not been able to keep up with the homes sold.