January 29, 2013

A Buyer's Quandary.

There's an interesting phenomenon that seems to be happening with the San Carlos real estate market as we finish the first month of 2012.   On one hand,  agents are reporting eye-popping attendance figures at their San Carlos open houses since the year kicked off.  I've heard figures ranging from 250 to as high as 400 people coming through some open houses over the course of a weekend.  That's a huge number of people!   And this doesn't even count the immense pile of Realtor cards that accumulate during the week as agents preview the homes for their clients.      A few weeks ago when the home at 868 Cordilleras Avenue was on the market, you couldn't even find a parking spot along that entire block of Cordilleras, Belle, or Elizabeth because there were so many people going through the open house.  It was an absolute zoo.  Sidewalk lemonade was almost as expensive as a beer at a 49er game.   You get the point…

So with all of the interest and buzz about these new listings, one would expect that they should be getting a boatload of offers, right?   Well, with the exception of the aforementioned listing that was rumored to have gotten over 20 offers, that really hasn't been happening.   From the informal data that I've gathered in talking with other agents, most homes that are lucky enough to get multiple offers are only getting 3-4.

Now, that's not to say that getting 3-4 offers on a listing should be considered a failure — far from it.  But with the sheer number of interested buyers flooding these open houses, it wouldn't be a surprise at all to see twice as many offers on some of these entry level homes.  So why not more?

What's Around The Corner?

I have a theory about why this is happening.  I certainly don't think the quality of listings has become suddenly unattractive, so I tend to discount that as a reason that more buyers aren't pulling the trigger.  What I think is happening is that buyers are circling, almost trying to buy some time to see what may be coming on the market in the next days/weeks.  After all, we're still in January and the spring market hasn't even kicked into gear yet.

This creates a quandary for home buyers — Buy now, and risk seeing a better home for less money in April.   Or, keep circling and miss out on a perfectly good home now.   It's a difficult decision, because nobody really knows for sure what the spring market is going to bring.   Will we have another year of sparse inventory?   Or will there be an influx of new listings to choose from when we hit Spring?

The consensus among Realtors pushes the needle a little towards the latter, which may be why some buyers are deciding to wait and see what's around the corner before they commit to writing an offer now.

Thoughts, comments?

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  1. Scott on January 29, 2013 at 4:06 pm

    Another reason could be people are intimidated and perhaps feel that there is no way to compete with the 200+ other people at these open houses. Some friends of mine looked at 868 Cordilleras and thought about making an offer only to change their mind because they didn’t feel they had a chance. After seeing what it closed for, they were right. How can an offer of $1MM with conventional financing on a house listed at $925K compete with an all cash offer of $1.21MM? It can’t . Why get your hopes up only to have them shot down.

  2. Chuck Gillooley on January 29, 2013 at 5:01 pm


    That’s a very good observation. I had several clients who expressed interested in the house, but were concerned about potentially overpaying for the house because of the level of interest. It didn’t help matters that the house was ridiculously under-priced to begin with.

    But even though they could have probably put together a competitive offer, there was a common belief that something better was probably going to come along in the spring. So they were content to wait it out.

    Thanks for your comment.

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