Special offer

Come on, are we really seeing Multiple Offers everywhere in Silicon Valley?

By
Real Estate Agent with Keller Williams Silicon Valley Cal BRE# 01358433

 

Recently we have been reading a lot of material in the news media about the rise of multiple offers, and particularly here inSilicon Valley.

 

The combination of very low interest rates, the dramatic rise of rental prices, instant Facebook Millionaires effect and a very limited inventory of houses has created this perfect storm.  It is not uncommon to hear about a dozen offers being submitted on any given property. 

 

New buyers who just entered the market are having difficulty absorbing this information because we are receiving conflicting information from the media.  On the one hands, we are seeing articles about multiple offers and historic low interest rates; then a few hours later, we are reading about a wave of foreclosures coming and that the housing crisis may still take years more to correct.  Which story do you believe?  Depends on where you are looking.

 

My recommendation always is to ask your local Real Estate professional.  The people who are out there daily dealing with people who want to buy and sell homes will have the true pulse of what is happening in your area; as opposed to reporters who are often times getting regional or citywide information to capture a wide audience.  It is a micro vs. macro view of the real estate market; real estate market conditions sometimes differ from zip code to zip code and neighborhood to neighborhood.  Get local information.  

 

For most consumers - myself included - real life data make it easier to understand than some theoretical data.   To give you an idea of what is truly happening in the Silicon Valley, here is an example of a bidding war in which my clients were recently involved.

 

Rose Garden Home   (the photos displayed are incorrect)

 

This is a nice practically move in condition home in the outer edge of the Rose Garden neighborhood in San Jose.  This is an REO property, which means the bank took it over after a foreclosure action.  

 

It is an incredible value priced  at $300,000.  There is no other property in the area at or near this condition for this price range.  Everyone knew this was under-priced to get activity, but given the shortage of supplies, many buyers - including mine – were interested in competing for it. (I won’t get into a debate as to the rationality of pricing it so low as to attract these numbers of offers here).   

 

As of the writing of this post, they have received 60 offers.  Yes, 60 offers to purchase, which they are submitting to the lender from which it will choose the winning bid.  Is this an extreme case: absolutely.  Are we seeing multiple offers in a majority of new listings: definitely.  

 

The point of writing this post, however,  is to demonstrate that it is common practice at this point in the desirable areas of Silicon Valley to receive multiple offers on pretty much all new listings that are priced correctly, unless the property has some major defect or issues which makes it undesirable.  Even homes on busy streets are receiving 8-9 offers.  Just pick up the phone and ask any local Realtor. 

 

So new buyers, be ready to face the current reality of the market place.  Until we get a correct balance where inventory has returned to normal levels, this type of bidding will be here, at least in the near future.   Good luck and may the Force be with you. 

Comments (4)

EMILIA B COOPER, REALTOR® SFR.NCHSE.AHWD
LAROSA REALTY - Orlando, FL
Short Sales, Foreclosure & Bank Owned Real Estate

Thank you Steve for the information, great post!!

May 04, 2012 09:56 AM
Erv Fleishman
Realty Associates - Boca Raton, FL
Luxury Prop Specialist Realty Associates

Sixty offers is pretty amazing. Sounds like a bidding war has broken out. So, what has been happening to prices in the valley of Mr Jobs. How are you advising your listing clients. 

May 04, 2012 10:13 AM
Steve Mun
Keller Williams Silicon Valley - Santa Clara, CA
Silicon Valley Realtor

Thank yoiu Emilia.

 

Erv,  I tell them what I told these buyers:  we have one shot to present our best offer, so make the offer as clean as possible and follow the instruction of the listing agent to the smallest details.   Try to make your offer stand out as being wirtten by a competent and thorough professional who has done his/her due diligence before hand.  

With 60 offers, a lot of them will be poorly written and with ridiculous contingencies and be otherwise objectionable.  So stand out by being an offer that is easy to accept from the lender's point of view.  With the price being equal, other details which demonstrate that the agent has done the homework in advance to demonstrate his/her propensity to get the deal closed without problems will go a long way.  

 

May 04, 2012 04:54 PM
Adrian Willanger
206 909-7536 AdrianWillanger-broker.com - Seattle, WA
Profit from my two decades of experience

Steve, Pricing is really an interesting strategy, I think good agents prepare their clients very well of what can happen once they find the home they want. Thanks for posting this. 

May 14, 2012 04:21 AM