Shh, quiet: do you hear the orchestra? I am actually singing the praises of the LA Times. Columnist Chip Jacobs article in the Business section was titled: "Not that cheap." He goes on to give the account of several buyers' experiences with trying to buy a home in LA. Trying is the operative word. With all the pent up demand for homes under 600K, buyers face stiff competition and even with offering over list price they are competing with often 20+ other offers. Whew! The truth is finally revealed.
This scenario is happening over and over again for one reason: Affordability Index. With the reduction in home values and the historically low interest rates (not to mention the state and federal tax credits) thousands of people that could not afford a home two years ago are desperate to buy a home. They are so desperate that they will offer well over list price. Market value has become an arbitrary number that has made home buying like gambling.
Some lovely clients of mine offered 4% over list price on an Anaheim, CA home just recently. Their FICO score is over 800 and their financing is a 20% down conventional loan. The bank did not select their offer, the winning offer was 6% over list. We gambled 4% but that was not enough. In this fast paced market it is imperative to work as a team with a Realtor and come up with a multi-faceted game plan.
The truth has been set free! It is a Seller's market, not a buyer's market, in the under 600K price point. We need houses to sell to our clients. Share the word.
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