Offer dates, multiple offers, overbidding in the Bay Area real estate

By
Real Estate Agent with Alain Pinel BRE 01367196

Real estate is local. Repeat: real estate is local.

What is happening in our neck of the woods in the Bay area of California may not happen in other cities or states. And our language may also differ because we encounter different scenarios, different challenges.

When I mentioned to a realtor in another state that we typically set offer dates, she didn't quite understand what I was talking about because she's never encountered it.

And buyers are often confused when they see a list price and are encouraged to submit an offer higher than list price with bigger downpayment, shorter contingency periods, etc. For the buyer who is new to the area, here's a quick overview.

 

 

 

Offer Date     

Agents and their sellers agree on a date when they will review offers.

Buyers agents may choose to submit their offers sooner than the stated Offer Date, but they are told that the sellers will not look at them until then.  

Typically, in a robust seller's market, the property is made available for viewing for a period of two weeks before an offer date is set. This enables the sellers to have two consecutive weekends of open houses if preferred, and at least one broker's tour, plus the usual showings during that time.

On Offer Date, agents typically call the Listing agent to inquire how many offers they have received or expect. This gives them an idea on how to prepare their offer.

Multiple Offers  

During a period when there is very little inventory for many buyers, a Sellers' Market is created.  Simple case of supply and demand.

When that happens, a property may receive more than one offer.

Note: It is not unusual for an agent to revise an offer once he hears how many offers were submitted. Several agents will even request to be in back up should the winning offer back out of the agreement.

 

 

 

 

Over bidding

This is when buyers submit offers for amounts higher than the listed price.

As distasteful as this may be for buyers who "won't play that game", they have to adjust their thinking and way of doing business to compete in a sellers market.

The list price is just a starting point --- it shouldn't be seen as the final sales price or what the sellers are willing to sell it for. In many markets, the final sales price is over the list price. By how much depends on the pricing strategy.

Buyers should be prepared to adjust their expectations. If their budget is $500,000, then they should set their sights lower, and find homes in a lower price range so that they have room to bid up.

 

 

 

Contingencies

Shorter period or None at all

There are basic three contingencies or conditions when writing the offer.

  • Loan appraisal
  • Loan approval
  • Buyer inspections

And of course, the final buyer walk-through to make sure that the property is in the condition that was agreed upon, and that the fixtures. appliances that were checked in the contract remain at the property.

In the heat of a sellers' market, some buyers take calculated risks when they shorten the contingency periods for less than 17 days for appraisal,  less than 21 days for loan approval, and may even waive contingencies for buyer inspection.

Some buyers may request pre-inspection of a non-invasive kind by having their own inspectors walk through the house with them. Later, armed with the inspector's report, they take a chance and write offer without a buyer inspection contingency.

Other buyers with substantial cash down payment, or perhaps all cash purchase, waive the loan appraisal and approval contingencies.

Waiving contingencies may have pitfalls, so it takes a very bold buyer with substantial cash to do so. Without contingencies, the buyer is locked in. Backing out for any reason may cost the buyer his/her initial deposit (up to 3% of purchase price) as liquidated damages.

 

Our local markets are over-heated, and may prompt gasps, heads shaking in disbelief....

Take a look at Corelogic's report on Home Sale Activity by City.  

·       Berkeley had a 34% appreciation from the same period last year

·       Albany with 21%,

·       Newark with 20%

·       Oakland with 17%

·       Alameda with 15%

·       San Leandro and Castro Valley with 13%

 

People moving into the area should prepare to be amazed, and should adjust their expectations.

 

RELATED POSTS

 

What do sellers look for in a good offer

 

Why was my offer rejected even though it was higher than list price

 

 

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overbidding
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Ambassador
2,668,109
Anna Banana Kruchten CRB, CRS, Broker
Phoenix Property Shoppe - Phoenix, AZ
Arizona's Top Banana of Real Estate!

Pacita buyers do indeed need to adjust their perception and behavior in a sellers market. Great explanation.

Jul 08, 2015 10:31 AM #1
Rainmaker
758,460
Troy Erickson
Diverse Solutions Realty www.ChandlerRealEstate.weebly.com - Chandler, AZ
Your Chandler, Ahwatukee, and East Valley Realtor

Pacita - You are absolutely correct saying that real estate is local, and so is the way real estate transactions are negotiated, accepted, processed and closed.

Jul 08, 2015 11:15 AM #2
Rainmaker
708,051
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Troy Erickson, what is it like in your neck of the woods?

Jul 08, 2015 11:33 AM #3
Rainmaker
2,733,707
Sally K. & David L. Hanson
Keller Williams 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce - Short Sale

 We don't have offer dates...the Buyer sets the time by which they want it accepted if it is not...the offer can be "dead"....If the offer is countered teh Selers may respond on their own timetable.

Jul 08, 2015 11:56 AM #4
Rainmaker
708,051
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Sally and David ---- it's a whole different world, isn't it?

 

Jul 08, 2015 12:17 PM #5
Rainmaker
482,506
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

There is no obligation to conduct multiple offer bidding. Also, highest offer is not always best offer. Buyers need to make clean offers with their best price if they want to reduce the risk of competing in a multiple offer free for all.

Jul 10, 2017 04:01 AM #6
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Rainmaker
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Pacita Dimacali

Alameda/Contra Costa Counties CA
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