The local real estate market is back to being on fire with mutliple offers the standard, not the exception. This is simply a matter of supply and demand, Los Altos (and nearby towns as well) have very little supply and there is LOTS of demand. It's not uncommon for homes to see 10 or more offers. As a buyer, everyone one of those situations means you have to make an offer above asking price in order to win.
Should you make an offer over asking price?
- Yes, if you really want the house. The winning bid will go high and how high depends on how many offers there are and the original asking price. If the home is priced at $1.2 million (a bargain for Los Altos), it's in nice condition, and it's in a nice neighborhood, be prepared to offer much more than asking. It's not unusual to see offers 10-15% over the asking price in these situations. But, the key to knowing if you want the house is asking a few simple questions...
- Have you been looking for a long time? If you spent the last year looking and having no luck, you're going to spend more this year (market appreciation). You might want to just bite the bullet and get it over with before the market rises too much.
- Do you have to buy a home now? Whether relocating, buying for schools, or whatever other reason you have if you need to buy now then just jump in and make an offer that will win. Be prepared to offer as much above asking price is warranted by the situation.
- Is it "the perfect house"? The ideal house is rare and you're better off NOT waiting for something similar at a lower price. Prices are rising in Los Altos so the chances of getting a "deal" are extremely low. You're better off buying what appeals to you now and making an offer above asking price - if it's needed.
You should not make an offer above asking price if...
- You just started looking in the market
- You're not in a hurry
- You still don't know what you really want
- You can't afford the higher price
Keep in mind that waiting until the slower periods in the year means just as little inventory as now with a little less competition. You may not get what you want and you're not likely to save, but just not overpay. One way or another, you'll still be competing against other buyers.
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Bryan Robertson, Broker Associate | T: 650.799.9951 | Email: bryan@serenogroup.com | Website: http://www.BryanRobertsonHomes.com |CA License: 01191946 | Sereno Group - Los Altos branch | 369 S. San Antonio Road | Los Altos, CA 94022
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Over both good and bad years I have worked with home buyers that in fact offered above asking and got their dream home. As you point out there a few questions to ask ones self and if the answers all point to the fact it is THE home then there are certainly times one offers more than the asking price. Very good post my friend. Have a great day in all you do!
Do you use escalator clauses in your market? We do, and they are good way for someone to get their home - providing they really, really want it. That's where a knowledgeable and competent agent is a great adviser - you'd be the guy to call in Los Altos.
I am seeing this more and more, if the property is upgraded and priced right multiple offers are coming in. This is great for the seller!
Pamela Lauridsen Bache
Debb - We do use escalator clauses but they're rare. Most agents don't like the idea and some will refuse an offer with one included. My advice for buyers is to go with the highest reasonable offer they're comfortable with.
John - Thanks John! As few basic questions will settle up the decision to make a strong offer. If it's the perfect house, go for it.
Suggested. Great summary of this topic and I like the fact that you included when not to offer above asking.
Bryan
It is the same here in the Napa Valley. The one thing I still find amazing, there has been very little upward price pressure yet here. Sooner or later, it will happen. cheers cvc thanks to John above for found this through his repost.
Jill - Thanks for suggesting. I always try to cover both sides of an argument.
Curtis - I'm sure that market will pick up fairly soon. The tech job marks will drive activity in SF hiring which should translate into a boon up in Napa Valley. Just my theory. I know buyers looking up there now based on jobs or retirement.
The key here is be prepared to go above asking. Because if you like the house for sure there will be others who do, and then the bidding starts. Certainly full price should be the first offer. Nothing less.
Bryan...I liked Debb's question regarding escalation clauses. Not a topic of discussion I hear that often. We don't use them in the City...Strongest and best is the MO for most offer situations. Switching gears for a moment, you'd get a kick out of Broker's tour up here (and I'm sure it's probably the same down your way)...agents practically tripping over each other at each property. We're all looking at the same listings because there isn't enough to see. Even more humorous was a mass email sent from a fellow agent in our office asking if anyone had an SFR (3 bedroom with parking) coming on the market soon in District 5 between $1.3 and $1.4m. It took all my strength not to write back and say, "yeah...get in line, Honey". (I actually had a good chuckle about that email with a few colleagues at our office meeting this morning).
Bryan, I was struck by something your post regarding paying 10%-15% higher on a home with multiple offers...it seems that is what was going on just before the bubble burst. I know that property values can stand a little of that and it's good to see homes regain some of the lost value.