I Thought This Was a Buyer Market!?

What a difference in working for our buyers the last few months have been. So we are supposed to be in a declining market, homes staying on the market for months on end but our buyers are competing for homes with other buyers. To make it worse if they truly want that home they have to offer more than it is listed for. What is going on out there?

Actually the bank owned properties (foreclosed) on the market are increasing but the banks are finally getting smart on how to get them to move. They are pricing the homes WAY below the current market value. Now I would not say this is a 'bait and switch' sales scenario or even that the Realtors are pricing it low to generate leads. Remember on these bank owned homes the bank runs the show, so the Realtor doesn't choose the list price, the bank does. The Realtor does provide details and suggestions on price but in the end the bank sets this number just like any owner would. So back on track, what they are doing now is allowing the 'Market', you the buyer, decide what the home is worth? They are pricing it low to get the traffic into the home and then allowing any interested buyers to set the value.

This is how home buying in a buyer market would normally work. So what's the catch and why are buyers paying above the asking price in a market like this? Simple supply and demand. Every buyer is looking for a great deal, a great home that needs no work and in a great location. Well the supply on great homes is a bit limited. Many of the foreclosed homes will need some work to get them up to most buyers standards.

Even the not so great home around the corner needing tens of thousands of dollars of work priced very aggressively can generate the same multiple buyer situation.

In the last month alone we have worked with several buyers that have placed offers on multiple homes only to lose every one to competing offers that were well above the asking price. It seems to take buyers about two lost offers for the reality to really set in. The market has been injected with some life by the banks pricing their homes at very competitive and often below market value prices.

When you do find that needle in a haystack make certain to really look at the past sales and know what they are selling for. If the home you are looking at is a '10', newer on the market or the price has just dropped significantly under the market value then you have a choice to make. You can bid low and hope to get it at a steal or you can choose not to ignore the trend and offer a reasonable price and terms to take that home away from the other buyers right behind you.

The additional factor that makes all of this difficult is that the banks reserve the right to consider other offers even if they have verbally or in writing accepted yours. So being the first offer in does not at all guarantee you will get the home.

There are some incredible deals out there but the Spring/Summer home market is really starting to heat up. As we speak with Relators, lenders and the industry locally they are all saying there is absolutely more activity and excitement out there.

Best of luck and if you have questions related to the local real estate market in Prince William County Virginia please contact us at any time.