Found this great article by Carolyn Said of the San Francisco Chronicle. Had to share and add my 2 cents are in italics.
Tight inventory – a dearth of homes for sale – is driving bidding wars throughout the Bay Area, sending prices up and leaving scores of disappointed would-be buyers. Homes that do hit the market sell within days.
So few homes are listed for sale that agents are resurrecting old ways of drumming up business – going door to door, leaving cards and flyers and writing personal letters, asking owners if they’re interested in selling. Social networking and e-mail blasts are being used to increase inventory as well.
This is all too true. The Caton Team has started targeting areas, condo complexes, neighborhoods and individual homes to find the right home for our buying clients. It’s that tough! And with some first time buyers, the window is closing as prices creep up. Not to mention we are on the edge of our seats worried if interest rates rise.
“People are going old-school, farming their territory,” said Lynda D, an agent in the East Bay, using real estate agent slang for canvassing neighborhoods.
While tight inventory is a national trend, it’s especially pronounced in the Bay Area.
Alameda County, for instance, had 949 homes for sale in February, down 64 percent from the 2,617 on the market at the same time last year, according to data from Realtor.com, the listings website of the National Association of Realtors. Contra Costa County had 899, down 58 percent from 2,152 in February 2012.
“Those are striking reductions in inventory,” said Errol Samuelson, president of Realtor.com.
While inventory numbers did tick up slightly from January to February, that was a normal seasonal change, not an indication of the logjam loosening.
“After seasonal adjustments, inventory is still falling; the underlying trend is still downward,” said Jed Kolko, chief economist with real estate site Trulia.com.
However, he thinks the rate of decline is slowing.
“Inventory tends to fall the most sharply after prices bottom, as no one wants to sell at the bottom, they just want to buy,” he said. Trulia shows that Bay Area prices bottomed more than a year ago.
Price a factor
Sellers remain reluctant and elusive for several reasons. Those who are still underwater – owing more than their house is worth – have the obvious impediment of not wanting to do a short sale.
But many others “feel underwater based on the price they paid,” Samuelson said. That is, someone who paid $700,000 for a home in 2007 won’t feel good about selling it for $625,000 right now, even though the sale would cover their remaining mortgage.
Some potential sellers, seeing prices surge, are hoping to hold out for more. Others who might want to move up to a bigger house fear that the market frenzy means they won’t be able to find or afford anything else.
This is such a dilemma. If a seller has enough equity, finally, to sell – the next question is – Where do we go? If a seller wants to stay in the Bay Area, selling now means jumping into the buying pool – and that pool is man eat man! So this truly creates a problem.
Now that it’s spring, the busiest real estate season, more homes should start hitting the market. But many agents have been taking matters into their own hands, making pitches directly to potential sellers about why it’s time to get off the fence.
Although there are numerous online sites to track homes for sale, “the way the market is set up now is forcing us to go back to the beginning where (agents) walk up to a door and knock and say, ‘Hi, how are you, my name is … ‘ ” said Adelaida M, a Realtor in San Francisco.
She recently worked with a client seeking a home in San Francisco’s Clarendon Heights neighborhood, above Cole Valley. After losing out with bids, she walked the neighborhood with him and identified houses he particularly liked. Mejia looked up the homeowners and wrote personal letters to each, explaining that her client loved the area and was seeking a house there.
“Three weeks later, one person called me back and said ‘We loved your letter, we’d love to talk even though we’re not on the market, come on over,’ ” she said.
Rich and Renee G, the homeowners, said they received two or three agent solicitations a week after unsuccessfully trying to sell the house last year, but ignored them because they were form letters.
I couldn’t agree more. The Caton Team has taken this stance and only solicits a seller when we have an actual buyer for their home. We’re not trying to just get listings. We are trying to unit buyers and sellers. I personally experienced what it feels like to be a seller for the past three years. Back and forth with my loan modification paperwork, we placed our home on the market and with no offers, pulled it off the market for a spell. During that time I got stacks and stacks of form letters. Truthfully, it was starting to frost my cookies. It was evident all us Realtors are trying to drum up business, but the form letters were bothering me. They were heartless and actually hurt me – because we didn’t really want to sell – but had to. In the end we listed our home in October of 2012 and sold it within weeks! Now, on the other side of the fence, I consider how a homeowner would feel when they get a form letter. Therefore The Caton Team takes the time to write a real letter, talk about the buyers we are representing and take it from there.
“Adelaida’s note was different; more personalized,” Rich said. “We were planning to put the house on the market again, but the note just pre-empted that.”
Her client ended up visiting the house, making an all-cash offer and buying it. “It was a really stress-free experience for both” the buyer and seller, she said.
If you do ask The Caton Team of your Realtor to solicit homes for you – be prepared to pay fair market value or more because if you aren’t willing too – the seller will simply put the home on the market, get multiple offers and sell for top dollar. So in other words, you need to ‘make them an offer they cannot refuse.’
Beating the bushes for sellers is an about-face from just 18 months ago, when the challenge was to find people who wanted to buy.
A corresponding trend is that homes are selling very quickly.
“The median days on market in Contra Costa is 13 days – that’s unbelievable,” Samuelson said. A year ago it was 33 days.
Redfin has identified another trend it calls “flash sales” – homes that sell within 24 hours of being listed, usually because a buyer swoops in with an offer too good to refuse. Often, those are buyers who have lost other bidding wars and are determined to land a property.
In the past six months, almost 1,000 Bay Area properties went under contract within one day, Redfin said.
That’s the truth. The Caton Team has started showing homes the day they come on the market and are prepared, right then and there, to write an offer if our client likes the home. Gone are the days, for now at least, that you could see a home, think about it, maybe sleep on it, then write the offer. Lately it’s felt like – ‘you like it – let’s write’! And with each offer we write for each buyer, we’re doing everything we can to make the offer more likable to the seller. We are using every tool in our toolbox and the toolbox of our clients.
“I just had that experience at a house in the Oakland hills,” DiVito said. “I held the brokers’ tour just before putting it on the market. A buyer and agent walked in and offered us our list price in cash on the spot.”
Underscoring how much the market has changed, she said her sellers had tried to sell the house a year ago “and could not move this property, even though they lowered the price three times.”
Been there done that. It is amazing how much our real estate market has changed in one year alone. In 2010 and 2011 I had my own condo to sell, and nobody was interested. October 2012 – put it on the market and within days I had several offers. In the end, 20 offers on the same condo. Amazing what a year can do.
The sellers, who were buying a new home and needed to sell quickly, were happy to take the same-day offer since a cash deal meant it couldn’t be derailed by problems with financing or appraisals.
“Flash-sale terms tend to be really good because (buyers) really want to lock down that property quickly,” DiVito said. “They’re more willing to meet the sellers’ needs to scoop it up before anyone else gets it.”
What happens next with inventory is a big question hanging over the real estate recovery.
“My best guess is that you’ll see an orderly return of inventory to the market,” Samuelson said. “I don’t expect that you’ll see the floodgates open and torrents of properties hit the market. But for each percentage point increase in price, there will be some people who for life reasons have wanted to sell for the past five years – their kids moved out, they got divorced – and now feel that the time is right and they have enough equity.”
Don’t be discouraged if you are a buyer out there. Don’t sit back either. The best education a buyer can have is living the market. So if you are thinking of buying a home, get pre-approved, call The Caton Team or your Realtor and come up with a plan. The more active you are today – the better prepared you will be tomorrow.
I read this article at: http://www.sfgate.com/default/article/Homes-sell-faster-than-ever-in-Bay-Area-4375058.php
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Thanks for reading – Sabrina
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