In today’s wild seller’s market, Silicon Valley’s hottest homes are sometimes seeing 18-20 offers, sometimes more. For homeowners, it has been a fantastic year to sell real estate. Even a distressed property or one with multiple issues, when marketed appropriately, can receive multiple offers and fetch a good price.
Good listing agents will do their best to create the right conditions to encourage as many offers as possible so that their seller can get the best price and terms for their home. This high-volume competition for homes, known as a bidding war, is great news for sellers and tough on buyers.
Needless to say, it’s not a great market for deal-seekers. Most buyers are loosing out on multiple homes before they are able to buy. Some feel hopeless watching the prices rise and choose to give up the search. Even buyers who are bidding at or over where a listing comps out often loose to higher offers with no contingencies!
No one wants to overpay for a home, but in this market it can sometimes feel like the only option.
So what’s a buyer to do? Here are my tips for home-seekers looking for a good deal in Silicon Valley’s hot housing market today.
Before you Buy
The first step is to understand that a good deal today is not the same thing as a good deal 5 years ago. It’s not even the same as last month or last week! Setting expectations based on the current market is key. Our monthly market reports are a useful tool to begin tracking these trends while you house hunt!
In the kind of raging hot seller’s market we’re seeing, yesterday’s news really is yesterday’s news. While the comps from last week’s sales might give an idea about market value, it isn’t today’s market value. Pent up demand and not enough inventory is having a strong impact on activity. Think of it this way: if 15 people lost out on the last house that was available in a neighborhood, there’s a good chance many of them will be bidding on the next one and willing to offer more! This can be a hard pill to swallow. A good Realtor will help buyers understand the similar comparable sales, the trends, and the activity of a specific property to gauge where a home is likely to sell and how to make a successful offer.
The market is always fluctuating (watch the weekly updates on my Altos market report), but this year we’ve been seeing market activity like we haven’t seen since 2017 – it just keeps ramping up! Keep the trajectory of the market in mind and adjust your expectations to match it.
Finding A Good Deal Today
The #1 rule is that a good deal starts with being an only offer. Everything else comes from this rule!
The house that the bidders rejected.
Bargain buyers, avoid the hottest freshest listings! Instead, look at homes that have been on the market for longer than 14 days.
There’s something in human psychology that causes us to prefer what others want. If a home is seeing a lot of activity, it must be better than one with no activity, right? Maybe not! Even today there are good homes that have been on the market longer than 2 weeks. Less activity means less competition, giving buyers a better chance of success with a lower price or worse terms. (Remember the #1 rule!) Take an interest in overlooked homes, and ask your agent to find out why an older listing hasn’t sold.
Another technique some buyers might use is a preemptive offer before a home is listed. This avoids the multiple-offer situation, but has a higher risk of rejection. Buyers might have less knowledge about the property if inspections are not complete, or may even submit a “blind offer” (site unseen). Listing agents usually recommend sellers that the home will probably fetch a better price on the open market, though occasionally a seller will put more value in not having to prepare the home to sell. Although chances of success are lower, and I’m not particularly fond of this method, it can be a means of getting a better price.
For buyers looking for a good deal, being adaptable is key. Know your priorities and know where you can be flexible. Don’t expect to find your updated dream home in the best school districts and get it for a bargain in this market. What can you compromise on? Are you willing to commute farther? Are you open to making more renovations? Would you consider a townhome instead of a single-family home? Or would you rather be flexible with your terms and finances?
There’s no end in sight for this raging hot seller’s market, and that’s tough news for any buyer. If you’re looking for a good deal be prepared to adjust your expectations to match the current market and the flexibility to adapt how you house hunt.