The market is hot, and some buyers feel discouraged to write offers on great homes.
Buyer's assume every home sells for over asking price when they don't.
Sellers are praying for offers in a "seller's market".
Learn how to avoid these pitfalls as a buyer and a seller.
Because of the hot real estate market, buyers have been conditioned to assume every home sells over asking price with multiple offers. Nobody wants to be in a bidding war (except for sellers), so many buyers feel discouraged to write offers on houses they like.
Luckily, I have access to the facts that you don't, so let me dispel the myths: The market is hot, but not scalding. For instance, in a neighborhood like Los Feliz, the typical home sells for around 98% of asking price. In Highland Park, it’s just over asking 100.8%. That sounds doable, right?
So why do buyers get scared of writing offers? I see two reasons:
They don't know the market.
They let unreliable reasoning get in their way.
1. They Don't Know The Market
Plain and simple, they don't. Most people don't know what they're talking about (and I'm including most real estate agents, too). They go to a couple open houses a month, and spend the rest of the time looking on Zillow and Redfin at all the pictures.
They talked to a lender about six months ago one time and told them they "should be fine". They wait around for months for their "pie in the sky" home to come along; little do they know that they have passed on so many delicious pies well within striking distance. They didn't see these homes "in person" because either A) the pictures online were terrible, or B) they thought it was too expensive and didn't even want to bother (when really it was overpriced and ultimately sold for way less).
It’s true that apps like Redfin and Zillow give buyers more access to real estate information. But as the researcher, E.O. Wilson, once said, "We are drowning in information and starving for wisdom."
In other words... because of all this information at our fingertips, buyers don’t bring in agents until much later in the process.
My argument is, the process doesn’t have to be as long as everyone is making it, spending hours Googling every little thing, trying to follow real estate trends, learning how the contracts work, etc. This would be like having access to Neil deGrasse Tyson for your physics exam, but going to the astrophysics Wikipedia page instead.
But honestly, can you blame buyers for waiting to bring in an agent? Most real estate agents in L.A. are like leaches, and you can’t get rid of them for YEARS once you talk to one of them!
2. They Let Unreliable Reasoning Get in Their Way
I'm not saying, don't use your brain. I'm saying, don't START with your brain... Most buyers will disqualify homes based on metrics they don't understand like "days on market" or "price per square foot". Both of those are super misleading for a number of reasons, but let’s not get off course.
Let's say there are two similar homes at similar prices, one's been on 12 days, one's been on 45 days, most people will automatically start making judgments about the homes based on nothing but that one number. It's OK... I'm guilty of it, too.
Here's our inner monologue: "It's been on the market for 45 days... it's probably no good because nobody else has bought it yet."
We've been conditioned to assume EVERY house sells within a week. Then we try to justify it and find excuses to not go to the open house, instead of just getting off the couch and going to see it. Then, when buyers actually go see the home, they think, "Why don't people want this? It's great!" ... and still pass on it! If it IS a great house, someone WILL buy it, get a great deal, and it won't be you.
Oh, and you should know, for the first half of 2017, in both LA County and the City of Los Angeles, the average days on market was over 45 days.
You Should Know
Don't be afraid to write low offers. Many of these sellers are at home stressing out, praying that someone writes an offer. You're going to make their day, not ruin it!
Home Viewing Tip
For the next few weeks, go look at open houses, and do your best NOT to look at the asking price until after you've seen the entire home and made a guess on how much it's worth. And... look in all different price ranges, too. Double or triple your price range, way below your price range. You will be amazed of the insight this gives you about the market.
Last Word of Advice
If you like a house, you should see if you can buy it. What would the mortgage payment look like? What kind of down payment do you need? How do you write an offer to buy a house? Have you even seen the paperwork? I'll tell you one thing... knowing how the process works makes writing offers MUCH EASIER once you learn how many protections you have as a buyer. It's a piece of cake. I can prove it!