It seems the time is upon us when things are mostly returning back to normal. June 15th marks the date many Californians will be foregoing masks. Marin County, the most vaccinated county in America, is in the least restrictive ‘yellow tier’. Speaking of which the tier system will be retired June 15th. People are going to movies and sporting events! Realtors are holding opens houses and broker’s opens. People can’t wait to get back to the lives that we knew before 2020.
Because potential home buyers have other things to do than surfing the internet for their dream home, we are naturally going to see a little less demand moving forward. The housing market is still very good for sellers, don’t get me wrong, but hopefully for the sake of the buyers out there we aren’t going to see $100,000 - $200,000 or greater overbids on every property that hits the market.
We are still going to see underpricing as a strategy to generate multiple offers, which potentially can lead to those larger overbids. I had a conversation with another Realtor this week whose got a home coming on the market he wants to list $50,000 - $100,000 under what I believe is the market value. His hope is to get lots of buyers lined up and ferret out the one or more buyers who are willing to break their bank and offer $100,000+ over the asking price. It’s a bit of a risky strategy, especially for some properties on busier streets, with hillside homes or homes in flood zones. Any of those factors you can’t do anything to change could potentially impact a buyer’s perception of value, dampen overbids and leave a seller wishing they hadn’t underpriced. That Realtor’s new listing has one of those incurable defects.
In the meantime, I spoke with a different Realtor this week who isn’t setting an offer date on an upcoming listing. Her sellers will look at offers anytime. Her price is probably at the market value, possibly even slightly over it. This is a little more normal strategy in Marin County. Realtors really don’t like to see a house priced significantly under its value, skewing the market by opening up the offer possibility to all the more buyers and creating an ultra-competitive buzz. There’s lots of different ways to price and sell a home. It’s nice to see that house most likely isn’t going to get bid to the moon.
What happens to an overpriced house in a more normal market? It sits. It doesn’t get many showings and when offers come in they can be unreasonably low. That’s how you know a property is overpriced. If the seller and their Realtor have overpriced the house, they need to be patient. It’s important not to jump at the first low offer that comes their way. I saw another Realtor do that a few years back on a condo, and the sellers took an offer 20% under their asking price! Sadly, I thought the condo might be only priced $10,000 - $25,000 too much. Had they not taken that low offer and executed a moderate reduction strategy the sellers likely would have walked away with a whole lot more money.
Right place, right time, right buyer, right seller, when it all comes together a buyer can occasionally score a ‘deal’ when a property is overpriced. It helps to write offers with all cash, no contingencies and quick closes. This is especially effective when a seller wants and needs to sell quickly. The buyers gain leverage, however there’s a lot of risk when you don’t do inspections and brokers always advise against it.
We still appear a long way from being in a buyer’s market. Slightly over 50% of available listing in Marin have accepted offers. Seller’s market conditions are anything over 35% in contract, neutral is 25-35% and buyer’s market is anything under 25%. A buyer’s market isn’t normal for Marin anyway. With low interest rates and our economy and society getting back on track, buyer’s market conditions feel a long way off.