That’s the total number of single family homes for sale in the entire city of San Carlos at the time of this post. That’s the lowest number of listings that I can recall seeing since…. well, ever. That number may increase by a handful as the weekend approaches, but even then it serves to underscore the rising stakes that the ever-growing number of home buyers in San Carlos are facing right now when they step to the plate and write an offer on a home. Here’s why…
The other night I participated in the
feeding frenzy offer presentation on a single family residence in San Carlos. There was no doubt in my mind that this home would fetch multiple offers in this market. Based on the satisfactory location and condition of this home, combined with the sheer lack of competition, I figured we’d be one of 5 or 6 offers on this place. I was dead wrong.
By the time the deadline drew to a close, there were 11. Ouch…
Give it Away.
Aside from a blowout offer price, there was one characteristic that the handful of offers that made the final cut shared: Terms. Or I should say, lack thereof. Not only were these offers way over the list price, but they had given away either their right to either a property condition contingency or their finance contingency to make their offer even more attractive. I would also imagine the close of escrow was as aggressive as they could cajole their lender into committing to.
Terms and contingencies are the teeter-totter of risk in a real estate transaction. The more contingencies that are loaded into the offer, the lower the risk is for the buyer — but the risk then becomes inversely higher for the seller. Why? Because the more contingencies that there are in a contract, the property remains in a limbo state in the sale longer, and the more avenues the buyer has to back out.
Conversely, an offer with fewer contingencies puts the risk squarely on the shoulders of the buyer while coincidentally making the offer more attractive to the seller. It’s this latter scenario that makes most home buyers queasy.
Not For the Faint of Heart.
In this market today, there are a LOT of buyers who have San Carlos at the top of their list, which is part of the reason why the inventory is so unbelievably low right now. But a significant portion of that group are first-time buyers, and this is not a friendly market for them right now. The prospect of making the largest financial decision of their lives is nerve wracking enough — now imagine having to take that first tight-rope walk without the safety net (contingencies) that they expected to have, and you can see how intimidating the stakes have become.
Am I recommending that you throw all caution to the wind and start writing non-contingent offers? No, of course not. The ultimate irony here is that when you’re in the process of writing up your offer, you’ll be asked to sign an advisory that basically states that you may be entering a market with multiple offers, and that if you choose to dive in without your contingencies you are doing so against the advice of your broker. And I’ll stand squarely behind those lines.
But you know how what’s in between those lines.
Welcome to to the White Oaks Blog — the most widely read blog dedicated to the San Carlos real estate market! Have blog updates sent to you automatically by subscribing for free by clicking here. Be sure to follow the White Oaks Blog on Facebook at https://Facebook.com/WhiteOaksBlog , and on Twitter @WhiteOaksBlog.
Don’t miss a single update!