I closed three deals in 2009 prior to April 15. Then I took 3.5 months off. I went to China with my family for 2 months (June and July) and spent the month of May preparing for the trip.
The represented the buyers in the deals I closed before leaving. The properties were all REO's. The bank was powerful. Each buyer accepted the bank's terms and it seems each buyer is very happy with his/her purchase. They feel they got a "deal" even thought they had to do repairs.
Since the beginning of August, I've written three offer: one for an REO and two for normal sales. In all these cases, there were multiple offers where the final price is much above asking price. All prices being under $600,000.00, these properties attract first time home buyers (perhaps Los Angeles is one of the few places where half a million dollars sounds affordable), but once the bidding gets underway, how affordable are those properties? They all need work. One place needs floors and another needs a total renovation. The original list price may have been alluring at 10 or 20 thousand dollars under current comps, but after the bidding starts, where's the deal?, so to speak. Can the first time home buyer who was pre-approved for a $550,000.00 afford the $50,000.00 increase in purchase price in addition to the money needed to bring the property up to living standards (floors or a sturdy deck or a functioning kitchen). I'm not talking about cosmetic issues--these are repairs that need to be done so one can move into the new home. These are properties listed at $550,000.00 and the counter asking for more than $600,000.00. These buyers wouldn't even look at properties at $600,000.00. As their agent, I don't know exactly how to council them. I don't want anyone to stress over house payments. It's true that 20,000.00 amortized over 30 years is not that much, but for people for whom very dollar is accounted for feel oppressed by this slight increase compounded by having to do much needed and rather costly repairs. I want to council, but I just don't know what to say. So, I say what I've always said "think about how much you'd like to have this house and how much it's worth to you and at what monetary point would you say 'I don't want it'." Then I let them give me their final number. I realize I'm complaining about something that we as real estate agents go through, but hey, I've never complained openly. I just go on and find my clients more properties to show. I wonder how other agents deal with this? how do you go about counseling your clients?
On the positive side, I'm interacting with listing agents who are very conscientious and really working hard for their sellers.
I suppose this is just a phase. The tax credit mandates that first time home buyers close on or before November 30, 2009 in order to qualify for the $8000.00 credit. People are in a hurry. It's a good time to sell that beat up house and for a seller to not pay for necessary repairs. At the low to middle range of the market, it's a seller's market, at least for the next couple of months. The LA Times reported that real estate sales have risen 1.9% since May. That makes sense. What happens next ? I'm curious.