FAQ: "There's no inventory out there. Any insights?

By
Real Estate Agent with Compass CA DRE# 01215160
One of the most frustrating situations we deal with day in and day out in our high-cost area is lack of inventory. The question from a client, "there's no inventory out there. Any insights?" is one I hear quite often. 
 
My response to this client went something like this:
 
Our low inventory certainly is a problem. You've seen the result--small homes needing a lot of updating/remodeling selling very high and very quickly, usually in a mater of days.  One example: a house in one of our Peninsula towns closed last week. Listed at $1,399,000, it sold for $1,610,000 in 8 days, with 14 offers. It needed almost everything updated/remodeled, but felt structurally sound. This is the just latest example. 
 
Ideas I mention below attempt to put you in the strongest buyer position possible. Some definitely aren't right for you (e.g., moving to another high school district); others might not be ideal, but something you could live with. Here goes:
 
Before anything else, get pre-approved for a purchase now, before you sell your existing home. (you're working on that, I know)  Get a pre-qualification, a "what if" you sold your existing home first. Suggestion: also please ask your lender how quickly he can close once you're in escrow; that can be critical in our market.
 
Idea #1 - if you're in no hurry, we wait 'til a good possibility arises, then check it out immediately and act quickly, knowing you'll likely be competing with multiple offers and sale price considerably over asking. Pros: you can move once, and we'd sell your current home after you are out. That is often easiest for families.
Cons: it could take a number of months before you succeed in securing a replacement home.
 
Idea #2 - change the parameters of your search. The location (for example, I have a wonderful townhouse the sellers are willing to sell off market, 3BR; 2.5BA, 1640 sq.ft. large 2-car garage, and views of the Pacific Ocean. It will sell under 1.1M, BUT--not in your desired school district.) The amenities - we've talked some about a large 2BR instead of 3, townhouse instead of single family home. If you decide a carport would work (maybe secure off-site storage?) it would open up more possibilities. The price - if you went up in price, your savings by selling the larger house would begin to dwindle
 
Idea #3 - sell before you buy. Two ways to go about this1) live in the house while it's on the market; we'd try to finagle a rent-back 30-60 days after closing in hopes that you'd find a replacement home during this time. Pro: you'd know your financial state clearly; you'd be in a strong position as a buyer if you could be an all-cash buyer. Con: high stress, you might need to move into temporary housing. 2) rent something while the house is being sold, sell the house, money in the bank, then we find a replacement home for you to buy. Pro: you could be cash buyer; you know where you'd be living for the present. Con: 2 moves; might have to be willing to pay a cancellation fee or rental fees until the lease term is up or the unit re-rented.
 
I worked with one couple who chose Idea #3, second option. They found a rental in Belmont; we then sold their Mountain View townhouse; we shortly thereafter found a great house in Belmont which they bought--mostly cash with a small loan. To them, the security of knowing their finances, and simplicity of not occupying a house while they lived there, overruled the inconvenience of moving twice.
 
Every person is different, with different tolerances and concerns. Other ideas you might ask yourself (and share with me any that you think would be helpful for me to know):
  • how long do you foresee living in a replacement home? Until the children are out of high school? out of college? indefinitely?
  • once high school isn't a concern, would you prefer to be in a different town? a different type of housing?
  • is there a financial need/desire to downsize? any certain date you'd like/need to shoot for?
I'm hitting you with a lot of info to digest, so take some time, discuss with your spouse so the two of you can come up with the plan that works best for you. As a strategy becomes clearer to you, or even if it doesn't, I'm more than happy to meet with you and talk over ideas to come up with a winning plan for you.
 
Until then, please keep me updated about your pre-approval and let me know when that's good to go.
 
For now, we're expanding locations and sitting pat for another month or so, hoping for that elusive inventory.
close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Real Estate Market Trends
Location:
California San Mateo County
Groups:
Local Expert
"Whacked"!!!
San Francisco Bay Area Real Estate
Market Reports
Bartender, Make it a Double
Tags:
inventory
home buying
silicon valley
san mateo county
low inventory
lack of inventory

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainmaker
1,831,444
Lottie Kendall
Compass - San Francisco, CA
Helping make your real estate dreams a reality

Dorie Dillard CRS GRI ABR - is low inventory a problem in your area, too? It's interesting to me how wide-spread it seems to be, especially in our urban areas.

Mar 31, 2019 09:42 AM #36
Rainmaker
2,138,109
Sharon Tara
Sharon Tara Transformations - Portsmouth, NH
New Hampshire Home Stager

My son is currently experiencing this. So hard to find something in his price range that isn't either a dump or a multi offer situation.

Mar 31, 2019 09:51 AM #37
Rainmaker
1,831,444
Lottie Kendall
Compass - San Francisco, CA
Helping make your real estate dreams a reality

Where is your son looking to purchase, Sharon Tara ? It's disheartening, but if he stays the course he'll be victorious. 

Mar 31, 2019 09:55 AM #38
Ambassador
4,102,302
Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Hi Lottie:

These are wonderful options for buyers to consider, depending on their situation and what they are willing to do. The inventory definitely makes it tough and so many homes are selling at and above asking with a lot of competition. But inventory is creeping up slowly.

Jeff

Mar 31, 2019 11:02 AM #39
Rainmaker
1,489,689
Kat Palmiotti
406-270-3667, kat@thehousekat.com, Broker, Blackstone Realty Group - brokered by eXp Realty - Kalispell, MT
The House Kat

These are great options for sellers to consider when selling/buying. Limited inventory (or too much inventory) can both make this process tricky.

Mar 31, 2019 02:06 PM #40
Rainmaker
823,673
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtor, Philly Main Line

Great ideas for buyers/sellers to consider when making a move. Well laid out plan for acheiving their goals, excellent post well done.

Mar 31, 2019 02:11 PM #41
Rainmaker
479,994
Bruce Hicks
Best Homes Hawaii - Honolulu, HI
Your Lifetime Friend/Helper!

I still get buyers asking for a $350-450k price range for a single family home, Lottie Kendall when the median price is $700-800k.

Apr 02, 2019 03:57 AM #42
Rainmaker
1,831,444
Lottie Kendall
Compass - San Francisco, CA
Helping make your real estate dreams a reality

Hello Jeff Dowler, CRS - I yearn to see more inventory in what I call "bread and butter" houses, the not-too-expensive ones, the less than pristine ones. No sign of it yet.

Apr 02, 2019 07:17 AM #43
Rainmaker
1,831,444
Lottie Kendall
Compass - San Francisco, CA
Helping make your real estate dreams a reality

Do you remember when bridge financing was an affordable option, Kat Palmiotti? Private money loans are available, but so costly--doesn't work for everyone.

Apr 02, 2019 07:19 AM #44
Rainmaker
1,831,444
Lottie Kendall
Compass - San Francisco, CA
Helping make your real estate dreams a reality

Thanks for your warm comments, Nick Vandekar, 610-203-4543 -- can you think of anything I omitted? Still brainstorming here.

Apr 02, 2019 07:20 AM #45
Rainmaker
1,831,444
Lottie Kendall
Compass - San Francisco, CA
Helping make your real estate dreams a reality

So, Bruce Hicks - how do you advise people wanting 10 years ago prices in 2019?

Apr 02, 2019 07:22 AM #46
Rainer
163,414
Anne Corbin
Long and Foster - Lake Anna - Spotsylvania, VA
Serving Lake Anna & Central Virginia

Flexibility, patience and tolerance are essential in this market. Thanks for the thoughtful post.

Apr 02, 2019 07:31 AM #47
Rainmaker
1,831,444
Lottie Kendall
Compass - San Francisco, CA
Helping make your real estate dreams a reality

You're right, Anne Corbin - good thing for my yoga training/practice!

Apr 02, 2019 07:47 AM #48
Rainmaker
388,313
M.C. Dwyer
Century 21 Showcase REALTORs - Felton, CA
MC Dwyer-Santa Cruz Mountains Property Specialist

It's so important - especially in our markets! - to have a couple of strategies, Plan A & Plan B.   You've taken the time to carefully explain the pros and cons of various strategies, so your clients will be better prepared.

Apr 02, 2019 10:48 AM #49
Rainmaker
544,326
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Experienced Agent in Kansas City Metro area

Low inventory in certain price ranges in the highly desireable areas have been the norm in my market (Kansas City metro area) for the past few years now.  I do think the market is showing a bit of a slowdown..may be too early to tell though

Apr 02, 2019 12:47 PM #50
Rainmaker
1,831,444
Lottie Kendall
Compass - San Francisco, CA
Helping make your real estate dreams a reality

Hello M.C. Dwyer - we definitely need various strategies to help buyers be successful when inventory is low. Is that what you're seeing, too, in Santa Cruz?

Apr 03, 2019 07:01 PM #51
Rainmaker
32,653
William Cook
Omni Fund, Inc. - Sarasota, FL
Your Mortgage Lending Expert

Lottie, too much demand up there. Nice weather, tech start-ups, nature, restaurants, walkable city, Warriors, and that Flintstones home of course :)

Apr 04, 2019 07:47 AM #52
Rainmaker
1,831,444
Lottie Kendall
Compass - San Francisco, CA
Helping make your real estate dreams a reality

Hi William Cook - yes, people really do enjoy living here. About the Flinstone house--I actually liked the back yard, visible from I-280, when they added the assortment of metal dinosauer sculptures. Unfortunately, they then painted concrete walls an assortment of bright colors, added numerous garish mushroom-looking stuff; it's now an eyesore in my opinion. I haven't driven around to the front, so can't speak to that. 

There's an art to decorating, whether inside or out; knowing when to stop is prime. 

Apr 04, 2019 08:58 AM #53
Rainmaker
65,933
Ricardo Mello
Manhattan Miami Real Estate - Manhattan, NY
Manhattan & Miami Real Estate Agent

Great blog!

Apr 15, 2019 01:09 PM #54
Rainmaker
1,831,444
Lottie Kendall
Compass - San Francisco, CA
Helping make your real estate dreams a reality

Thanks, Ricardo Mello - is lack of inventory something hampering your area also? It seems to be more than just San Francisco and the Silicon Valley.

Apr 15, 2019 01:56 PM #55
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
1,831,444

Lottie Kendall

Helping make your real estate dreams a reality
How Can I Help?
*
*
*
*
Spam prevention