Monthly Archives: May 2013

Market Winds Shifting?

WeathervaneI’ve been saying it all along.  Unless/until something more important rises up on its own, begging to be talked about,  insisting on being the center of attention,  I’m just going to keep plowing all the fertile ground surrounding the subject of Multiple Offers.

Writing about them ad infinitum ad nauseum.   Multiple Offers will never lack for substance and intriguing storylines.  There are so many dimensions of human thought and emotion wrapped into their complexity. Big things. Little things.  Glaringly obvious things. Subtle and infinitely nuanced things.

How to think about them? How to prepare for them? How to position yourself in the middle of them? How to design a strategy that ups your chances of coming out on top in the dog-eat-dog crazy-ass world of them?

For the last two and a half months – March, April and part of May –  there just hasn’t been any other topic du jour or cause celeb that’s come close to joining the conversation.  Multiple Offers have cast a giant shadow across the consciousness of our collective real estate of mind.

But here’s a head’s up.  I’m starting to get a feeling.  A slight inner twitch. There’s a  little voice whispering somewhere way back in the inner recesseses of my bloggin’ noggin.  Is it just an echo in the cavern sounding on deaf ears like a tree falling in an unvisited forest?  Or is it time to take note and start talking  about something else?

Maybe we are  there. Not sure.  The jury is still out.   By the time we really know whether it is anything to concern ourselves with, it will have already happened.  Or not.  In real estate it’s hindsight that’s 20-20.  Not foresight.

Real estate is a phenomenon that is always being carried forward on the bubble of perception that both precedes and follows it.  And it almost always gives us numbers to work with that are trailing in it’s wake  – woefully behind the curve that inevitably keeps disappearing on the horizon in our rear view mirrors.

Let’s just remind ourselves shall we?  When those numbers come out in mid June –  they’ll be talking about sales that closed in the month of May.  How many.  What the median price was. Average price. How all of the compilations compare to the same month last year. Or the previous month this year.

But those closed sales aren’t going to give us an accurate snapshot of what the market is  doing in June – at that exact moment in time we are reading those headlines. They’ll be looking at what closed in May.  And what closed in May tells us about what buyers and sellers were agreeing to 30 to 45 to 60 days before that.  What deals were being negotiated in March or April. Not in the distant future of June.

The market changes daily. It’s dynamic and it never stays the same. Is it going up? Down? At what speed?  In what price ranges?  Are some properties moving in a way others aren’t?

Consider this a cautionary column.  A whiff. A taste A mere hint of a suggestion of a possibility that there might be more than meets the eye going on out there in real estate land.  Winds shifting. Maybe not everything is what it seems. Or how it is portrayed in those monthly bold banner bullish articles about real estate.

Median Price in Santa Cruz County in the mid $600s?   Yep.  True.   Is it that really that simple?   Does it mean that prices and sales will just keep getting bigger and better with each passing month? Every day in every way?

Are prices rising across the board in every price range on every kind of property?  Are there lots more sales?

Well no. Now that you mention it.  There aren’t.   The market is kicking butt in certain segments – but it’s a very selective butt-kicking that is taking place.   Got a cute little 3br/2ba single level house in a decent neighborhood for $625,000?  Let the butt-kicking commence!!!   A townhome for $350,000?  Yep – major butt-kicking action ahead.

But what happens when we start to stretch those price points a little further?  Got something for $1.2? Or $1.7? Or a beach house for $3 million?   Got a condo closer to  $500k than $400k? A different story begins to emerge.

Call it a refraction of the marketplace.   A compression zone with a  glass ceiling hovering above it.  Next week – let’s see if we can analyze what’s going on in some of those market segments where butt-kicking isn’t the norm.
Share

Negotiating the No-Man’s Land of Multiple-Offers

nomanslandWhere were we?  Still slogging and blogging on about our new favorite cause celeb. The real estate topic du jour that’s on the tip of just about every buyer’s tongue these days.

The thing that’s been propelled to the front of so many cerebral cortexes recently. Locked tightly into the roller coaster rides of repetitive brain loops all across America.   The single biggest worry most buyers are likely to find themselves obsessing over when they wake up in the middle of the night with a cold sweat.

We’re talking about multiple-offers.  Are there any other kind?  Of course, there are.  But in this market it doesn’t feel like it.  There are lots of other things we could talk about – but none more germane.

The onslaught of serial offers and surreal situations has given rise to all sorts of multiple-offer personality disorders on the mean streets of real estate as of late.   It’s a strange “estate of affairs”  – this unexpected new (ab)normal that appeared when a sudden shift of the pendulum  accelerated so fast past the bottom, after all those lowly years in the dumper,  that it tossed the collective marketplace on its ear and left all of us spinning.

Who woulda thunk? But, it’s just the kind of head-y set of circumstances that Real Estate of Mind thrives on and embraces.  The dance. The nuance, The pathos.  The ecstasy.  The never-a-dull-moment opportunity to plumb the depths of the human condition and it’s ongoing relationship to the home that lives at its heart.

So what do most Buyers facing a multiple-offer situation want to know?  Simple:  “What’s the least amount I can offer and still stand a chance?  I don’t want to pay any more than I have to.  I know I can’t offer too little or I’ll get creamed.  Where’s the Goldilocks Zone? The price that’s not too high or too low but just right?  What buys me a ticket to the second round and get’s my foot in the door?  If there are ten offers – how do I decide what to offer in order to make the first cut and receive a counter offer?”

And we’ll get to all of that, I promise.  But first, I have a question.  This is going to sound like another one of Brezsny’s infinite digressions.  It’s not.   It’s actually the exact right starting point for anyone out there that’s about to enter into a pending multiple-offer competition.

My question is:  How much do you want it? Is this a home that you have to have? One that you’ll be crushed if you don’t get it?  Or one you can take or leave?  One that kinda works but isn’t perfect?  One you can settle for?  Something you can move on from? Walk away in one emotional piece?

If you don’t know the answer,  then,  you’re not going to negotiate the no-man’s land of multiple-offers very well.  You stand a very good chance of either sabotaging your own best attempts to get something you really want or of going way out on a limb to get something you really didn’t want after all.

If you aren’t sure what you want and what it means and how it fits with the rest of your life and future…. and you can’t anchor your decision-making to a solid, non-negotiable sense of home that lies somewhere deep down, in and around the region of the central core of your being, then, you are already drifting in space. You are sleep-walking in place, through all of those open houses and search engine e mails of wishful thoughts.

You have left yourself vulnerable to the auction-like, adrenalin-fueled, altered state of realty that comes in the heat of multiple-offer mania.  A flood of fears. A slew of whims and desires.  The opium of consumer-driven fantasies we’ve all been inculcated with since birth.

This is your homework between now and whenever it is that you find that place you think you want to try to get.  Or at least until next week’s column.  Forget that latest greatest new listing for a minute.  Step back and do a little more soul-searching.  You have to own your own process before you can expect to own a real version of your own home.  It’s not out there. Home is here. Think of it as a pre-qualifying process that supercedes pre-qualifying with the bank.  Pre-qualifying what quality of life really means to you when you are home alone with yourself.
In the meantime…stay thirsty my friends.

Share

Listening Carefully to What the Market Is Saying

listening-ear1This is the 8th in a series about Multiple-Offer situations. How to think about them. How to approach them. And hopefully how to increase your chances of success when you find yourself staring down the barrel of one.

It started with 19 offers I received on a listing in March.  Every week since, I’ve continued writing and observing other Multiple-Offer frays that have come up first hand along the way.

There was the 13-offer “steel cage match” my West Side Buyer-clients won. The 5-offer “Shake-down in Quake-town” that other Buyers survived.  A recent 6-offer donnybrook  that Sellers of mine took part in.   And a few other minor skirmishes with 3-offers apiece.

Scratching the surface of these situations with a fine-toothed comb has sharpened my focus and conviction about the need for effective m.o./m.o’s (multiple offer modus operandi).

It’s also been quite apparent that some folks aren’t reading Real Estate of Mind on a regular basis. Buyers, Sellers, Agents that don’t seem to be getting it.  I’m afraid they’re going to repeat the same mistakes over and over again.  Just sayin’.

If you want the whole series of columns, e mail me and I’ll send ‘em for free. Some people actually pay money for this stuff.

But back to the “real” business at hand. Nothing is certain with multiple offers.  Like so many other fundamental things in real estate – success with multiple-offers comes from listening carefully to what the market is telling you. From understanding and knowing what resources and strengths you bring to the table. And from recognizing your own weaknesses so you can navigate around them.

Every offer-scape on every property is different but a strategic approach to multiple-offers is usually based on two primary factors: 1) the number of other offers lined up in the multiple-offer queue 2) the length of time it takes for the queue to form.

In simplest terms:  You make a very different offer when you are competing with one other Buyer as opposed to ten. And you make a very different offer if it’s the first day on the market as opposed to a month later.

The two basic models for offers people generally write are: 1) “the pre-emptive strike” and 2) “making it past the first cut”.  There is actually a third kind – sort of a step-cousin to the  “low-ball” offer. Since low offers don’t get very far in multiple offer land, they rarely count for much – except as extra leverage for the Seller.   If Buyers don’t get an acceptance or at least a counter offer – because they offered too little – the rest is a moot point.  They’ve already shot themselves in the foot.

The “ Pre-Emptive Strike is reserved for crazy-busy and obscenely- competitive markets.  When things have reached a fevered-pitch and someone with enough resources decides they have to have a particular place or the world might end.  Or… they might not get what they want. Which, for some people with lots of money, equates to the same thing.

It’s not exactly “an offer the Seller can’t refuse” with Marlin Brando making a cameo as the Buyer’s Broker.  More like the kind of offer that a Seller might end up shooting himself  over later if he doesn’t take it –  i.e. – one that’s too good to take a chance on refusing.

These are usually all-cash.  At amounts so far over list price and beyond initial Seller expectations that it blows everyone else away.  The Seller is given a short time to respond. Take it or leave it.  Accept it or take his chances with the rest of the market.

If apochryphal memory serves, there was a famous million dollar over-bid on a house in Palo Alto back in 1999 that sent champagne glasses clinking all over the Bay Area.  That was a pre-emptive strike by someone who could really afford it.

Most of the rest of us mortals fall into the other category of offeror – as in – what’s the least amount of money  I can offer and still have a chance. How much is too little?

Next week we’ll talk about making it past the first cut.
Share

Multiple-Offers – the Many-Headed Hydra

img_hydraWe’ve spent quite a bit of time in recent columns getting psyched-up to enter the multiple-offer marketplace.  Wrapping our hearts and minds around the whole unseemly idea of competing for a house!  Putting our game faces on. Preparing for the rigors of what feels like a completely random and arbitrary process.

So now what?  Are we ready to make an offer?

I can hear them now.  Those thousands of questions that begin to spill-out of the average Buyer’s brainpan when they finally find a place – only to discover that they share the same dream home dream with some unknown number of other nameless, faceless stranger/buyers ready to go after it too.

Questions like:  Should I make an offer right away? Do I come in at full price? Slightly above?  Slightly below?  I don’t want to offer more than I have to?  I won’t lose it for a couple thousand dollars will I?  How do I know there really are other offers? Do they have to tell us what the other offers are? What if I offer full price – don’t they have to take it?  How quickly will they respond?  If I’ve got all-cash – can I offer $50,000 less?  Will they just accept the best offer? Will they counter all the offers?  Are they going to force me to spend more than I can afford?

First things first.   Slow down. Quiet all the voices in your inner-ear that are spinning you around, throwing you off-balance.  This multiple-offer thing is a many-headed hydra and it takes a while to grok the full gestalt.  Sometimes you even have to go through a couple of losing battles before you really get the hang of it.

I wish I could tell you there was an off-the-shelf, multiple-offer paint-by-the numbers kit that allowed everyone to fill in the blanks in rational, linear, step by step fashion in a way that made the bigger picture simply emerge with absolute clarity.

It doesn’t work like that of course. Every offer situation is different.  We are dealing with the vagaries of human nature here. As such, for every rational move made there’s an equal measure of intuitive feel and educated guesswork that goes into the mix.

Heck, if it were too easy,  that would take all the excruciating fun out of the process. No more tortured introspection and obsessive observation of all the subtle nuances.   Well….maybe that’s just me.

In the end…is it just luck that decides who gets it?  Maybe a little.  But what we are talking about is upping your odds of success by learning how to think strategically rather than just tossing your hat into the ring in helter-skelter fashion. If you launch into the process without any overview or an Agent who has never been in a multiple-offer situation before, your odds of success just went radically down.

Here’s a few basic things to know:

– If the average Seller gets a full price offer on the first day their first response will probably be:  “ I knew I priced it too low.  I’m leaving money on the table!”

– If the average Buyer makes an offer that gets accepted by a Seller right off the bat with no counter offer, that Buyer immediately thinks: “I offered too much! I coulda got it for less!!”

The market doesn’t lie.  It is an incredibly honest feedback mechanism.  Kind of an ongoing, up to the minute Nielsen Survey or impromptu political polling device. All kinds of people – different ages, demographics and desires – get together to issue collective judgment on each new listing that comes on the market.  If ten different Buyers want to buy it on the first day – then the jury has rendered a decisive verdict.  If no one wants to buy it in the first two months, the jury is deadlocked and is sending a very different message in no uncertain terms.

Success in multiple-offer land is about Buyers and Sellers listening carefully to what the market has to tell them.  And a strategic approach to multiple offers makes important assessments based on two primary criteria:  1) the number of other offers lined up in the multiple offer queue 2) the length of time it takes for the queue to form.

You make a different offer when you are competing with one other Buyer as opposed to ten.  And  you make a different offer if it’s the first day on the market as opposed to a month later.

More next week.
Share