We Need More Homes to Sell

Let me tell you about about a couple of clients that I’ve been working with for a couple of months.  They are a young couple, married a year, and are expecting their first child in November.  He is an LAPD officer; she is a senior financial analyst for Disney.  They have excellent credit scores and money in the bank.  They have been renting a small home and now they want to own their first home.  They have very reasonable expectations about their new home and certainly do not expect it to be perfect.  

Their first offer was for a townhouse that was well above the asking price.  They lost out to one that was over the asking price by a lot more.  The next offer they tendered was again for a townhouse.  This time they offered a price that was extremely generous for the modest home, $25,000 over the asking price, with terms any seller would appreciate.  We lost out again.  The third time I made a verbal offer to the listing agent with the offer my clients were willing to pay, which was, again, generously well over the asking price.  The agent old me not to waste my time writing the offer; he already received an offer that was $50,000 over the asking price with 50% down.

So we are still looking.

I’ve begun to door knock the neighborhoods my clients prefer to live in, telling owners whose homes are not currently on the market about my clients wanting a home and asking if they are interested in selling theirs.  Most people say “No.”  Some say they would if they could get a price that is unfathomably high.  Others think I am simply offering a ruse to list their home.

But the bottom line is that the current lack of inventory of homes is driving prices high, and the expectations of sellers even higher.  Buyers like my clients are losing out to individual and corporate investors who are willing to pay cash for homes at prices that are far and away above their appraised value.  These investors figure, “What the hell.  They will lease it out until the home’s value exceeds their purchase price when they will sell it for a profit.  In the meantime they collect rent.”  Or they lose out to people whose downpayment is enough to cover the difference between the high purchase price and the much lower appraised value.

How do you, a vibrant, earnest, honest, hardworking person who is not stuffed to the gills in cash, compete for a home?

Good agents have tactics that can make their clients more competitive, but not necessarily triumphant.  Agents can look for pocket listings, which are listings that for one reason or another are not published in the multiple listing services.  They can offer financing terms on behalf of their clients that accommodate the sellers’ interests.  They can author letters that extol their buying clients’ virtues.  They can take advantage of their relationships with other agents.

As I am writing this there are a total of 55 homes for sale in Chatsworth, 80 in Northridge.  Keep in mind prices are rising.  So are the interest rates.  There are projections that mortgage interest rates will be 6% by the end of next year.  Consequently there will surely be additional demand for homes, which will drive prices for them up even further.

What’s the solution?  More homes on the market.  How do we achieve that?  You tell me.

In the meantime, I’ll keep working with my clients to land the right house at the right price.

Interested in selling your home?