Boston condos for sale: Will we see bidding wars in 2021?
We have enjoyed our historically lowest mortgage rates for some time and after seeing a small spike in the interest rate, now we’re seeing fluctuations in both directions. Did I become curious as to why?
With Boston condo for sale inventories low and downtown Boston real estate values rising over the past year, sellers are holding firm on the price they demand.
The title shouldn’t be will we have bidding wars…. because we are having bidding wars
A recent survey by the real estate agent referral firm HomeLight has found that 52% of agents believe the biggest challenge sellers will face in 2021 is the temptation to overprice their homes due to the red hot market we’re in.
It never occurs to agents to properly conduct a bidding war where the market decides the winner.
Instead, they choose the easy route and just collect offers, itemize them on a spreadsheet, and then point out a winner to the sellers. It is an ego-boosting choice that fares well around the brokerage’s water cooler, but is likely to leave loads of money on the table.
Agents who deny open bidding and just process one round of blind offers are clerks, not salesmen.
By the time they got the last offer, Quinn and Daryn Shapurji had received 54 bids on their four-bedroom, single-family house in Fishers, Ind., in just three days. Ms. Shapurji said they felt totally overwhelmed — and a bit melancholy.
“We felt bad that we had to say no to so many people, because we got a lot of beautiful letters from buyers saying how much they loved our house and why they wanted to live in the area,” said Ms. Shapurji, 32, a closing coordinator for a home builder. “Some buyers had already struck out on five or six homes.”
Chris Dossman, the couple’s real estate agent, suggested they take a cash offer that was $25,000 above their home’s list price of $220,000. “It wasn’t the highest offer they received, but the cash buyer waived the appraisal, so we knew that we weren’t going to have an issue with the home closing from a financing perspective,” said Ms. Dossman, an agent with Century 21 Scheetz based in Indianapolis.
“Fifty-four offers is by far the highest number of offers that I’ve ever received for a listing,” added Ms. Dossman, who has been an agent for 15 years.
“We’re seeing an inventory crisis,” said Katie Wethman, a Washington, D.C.-based real estate agent at Keller Williams Realty. Indeed, total home supply at the end of March sat at only 1.07 million units, down 28.2 percent from a year ago, according to the National Association of Realtors. The association’s data also found that homes typically sold in a record-low time of just 18 days in March, down from a 29-day average in March 2020.
Still, sellers face a challenge: “Getting inundated with offers can be overwhelming, and it can make it harder for sellers to choose the best offer,” said Alicia Stoughton, a real estate agent and designer at Keller Williams Advisors in Cincinnati, Ohio.
Why? Because “the highest offer isn’t always the best offer,” Ms. Stoughton said.
Here are the factors sellers should consider, in addition to purchase price, when evaluating multiple offers.
“Cash is king,” according to Nancy Newquist-Nolan, a real estate agent at Coldwell Banker in Santa Barbara, Calif. “I often recommend sellers take a cash offer, even if it’s not the highest offer.”
Still, mortgage buyers aren’t completely out of the running, said Ms. Wethman. “If you’re confident in the buyer’s lender and their ability to get approved for a mortgage, there’s not a lot of risk taking an offer from a buyer who’s getting a loan,” she said. Her advice to sellers? “Do your due diligence on the lender who is providing the funds,” she recommends.
This is a step where sellers can lean on their listing agent, Ms. Newquist-Nolan said. “I call up the lender and ask how qualified the buyer is for their loan,” she said. Moreover, “some lenders are notorious for dragging their feet and missing key deadlines.”
The best approach that sellers can take when weighing offers, Mr. Lejeune said, is to compare them side-by-side. His strategy: “I present offers to my clients in an Excel spreadsheet that specifics the offer price, loan amount, type of loan, contingencies, and other important metrics,” he said. “It’s basically a cheat sheet for sellers.”
Ms. Dossman is also a fan of presenting offers in a spreadsheet. As she puts it, “You want to have all the information in front of you when you’re making a decision.”
Many buyers attach personal letters with their offers to try to sway the sellers in their favor. But some real estate agents don’t even show sellers these letters when they present offers to avoid the possibility of unlawful bias against a buyer. But Ms. Dossman said she will share letters after vetting them to make sure there isn’t any information that could raise the potential for fair housing violations.
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Home sellers are firmly in the driving seat amid rising prices and low inventory, and 15% of real estate pros surveyed by HomeLight said they were worried that bidding wars in 2021 will lead to more offers on homes that are above their appraised values.
Bidding wars have become commonplace in many markets. In December, almost half of Redfin’s agents reported that they’ve faced multiple bidders when submitting offers for their clients.
Additionally, HomeLight’s survey found that the biggest challenge for home buyers in 2021 will be the lack of housing options due to low inventory, and the inability to find a home they like, cited by 51.4% of all agents. Almost 19% of agents said they were also concerned their clients might lose out on multiple homes this year due to higher bids, and 11% said their clients will struggle to find an affordable home this year.