Mr. and Mrs. Singh are frustrated with the current real estate market conditions. They recently submitted 2 offers in Cupertino (area 18), both were single family homes listed in upper 900K to 1M range. The properties have 3 bathrooms, 2.5 baths, around 1800 sq feet, moderately maintained and updated.
The first offer they presented was AT the asking price. They were 10 offers total. And they did not get a second chance. The listing agent was kind to tell their representative that theirs was in the bottom of all offers.
The following week, they made another offer. This time, they added $50,000 to the asking price. There were 7 offers total. 2 of them with cash and one of which has no contingencies. They did get a chance to counter: the seller asked all bidders to submit the highest and best offer. In the end, the seller selected the offer which was clean (no contingencies) and 15% over the asking price.
Mr. and Mrs. Singh did not get it again, because they did not add enough. (8%)
Mr. and Mrs. Singh were not alone, they are just one of the eager buyers this house hunting season, baffled, frustrated and disappointed.
The reason made the real estate market so hot again in the Valley in past few months was the scarcity of inventories. Overall, all Bay Area cities are experiencing low inventories. In the Valley along, currently there are 1,640 units available (SFH + TH/CONDO), compared with last year this time, they were 3,726 units available.
Whereas, the SOLD UNITS, of the same period are almost the same, 1625 vs. 1627. This interprets: less inventory but fast closing. The demand is high.
The frantic bidding may or may not have backflash (appraisal issue. They were cases of 2nd and 3rd appraisal had to be ordered) . 10 to 15 percent over asking price was not rare.
The sold median prices in the Valley for the past 5 months has risen from $485,000 (Jan, 2012) to $649,500 (May, 2012), for single family homes. For town homes and condos, prices improved from $270,000 to $370,000. A 34% and 37% jump respectively.
Mr. and Mrs. Singh may have to wait for a while to get the house they want. Let’s just keep the uptrend direction for the market for now. It’s about time to see real estate market to become hot again.
Stats source: MLS LISTINGS SERVICES