Hello to all my Silicon Valley home buyers and sellers:
Beforehand, know that this blog is specific to Silicon Valley Real Estate Market, which is right now the Eye of a Storm of a Seller's Market in the Bay area.
But firstly, let us define what a Seller's market is in real estate terms: Low inventory and a high number of potential home buyers.
From a listing agent perspective the pricing strategies in such a housing market are as follows:
- Pricing the property at fair market value, no less no more. In this configuration, the listing agent will most likely sell the property in a timely manner but will lose potential cash buyers as there is not a lot of room for price negotiation. Cash buyers are bargain hunters.
- Pricing the home under fair market value to get as many offers as possible on the property. The listing agent will be in what is commonly referred to in real estate a multiple offer situation. As a buyer, you need to know that in a multiple offer situation, sellers and their Realtor have 3 possibilities: refusing all offers, picking only one offer or asking all the buyers to come with their best and highest offer.
- Overpricing the property for sale, with the belief that because housing inventory is low, the property will sell anyway. This is in my opinion the last thing you want to do. This pricing strategy leads in most cases to setting wrong expectations for sellers and taking buyers (and their real estate agents) for dumber than they are.
Focusing on 1. and 2. which are hopefully the most common pricing configurations, here is my advice to home buyers:
- Be over-prepared...meaning in particular that you must be ready to buy, not just interested. In other words, you are fully pre-approved by a lender of your choice, you know what you are getting into contract-wise when buying a home and you are available at any moment to sign the offer.
- Pick a super-reactive/proactive agent: In a sellers ‘market, time is of essence. The quicker your Realtor can put an offer together, the better.
- Understand that this is a number's game. You will probably need to put several offers on several properties before getting your offer accepted. Do not get fixed on one place in particular, be prepared to lose often and eventually win.
In summary, patience, persistence and the reactivity of your Realtor in particular will make the difference in a seller's market.
© Sophia Delacotte CDPE, SFR, CHS
San Jose Realtor
Cell: (408) 717-2575