Many buyers are finding it very challenging to purchase homes in San Diego’s current housing market. In one case, a buyer offered more than $50,000 over the asking price on a condo in Carmel Valley and still did not get their offer accepted. The selling agent received 36 other offers on the property after only one weekend of it being on the market! Linda offers her perspective as a San Diego real estate agent with over 36 years of experience helping clients buy and sell homes.
First and foremost, be prepared. In this market, it’s not enough to be pre-qualified for a loan. You want to be pre-approved by a lender, so that you can be ready to buy when that perfect home comes on the market. If you’re not ready to sign the paperwork, the home is going to go to someone who is.
A pre-qualification is an estimate as to the loan amount you can qualify for based on unverified information you’ve provided a lender. Whereas a pre-approval is based on verified information including savings, investments, and pay stubs. With a pre-approval, it’s just a matter of identifying a property and sending that paperwork to an underwriter.
In a market like this, in which prices are changing at such a rapid rate, buyers feel like they are being pushed too high, too fast. Unfortunately, sometimes a buyer has to lose out on an offer before they are mentally ready to go as high as needed to get their offer accepted. More often than not, the buyers who are getting their offers accepted right now are those who have already lost out on another property.
A buyer needs to look at the most recent comparable sale and go up from there. Properties that sold six months ago may not be relevant comparisons any more. A buyer needs to go with their best number - especially since there’s no guarantee that a seller is going to make a counter-offer in this market, not when they have higher offers to choose from.
Look at those recent sales, then talk to your agent. Your best price is what you are willing to pay for a home given its location and condition, as well as what you can afford. If you can afford a home at $1.2 million, it may be in your best interest to look at homes priced slightly lower so you can be competitive. If you are looking at homes already at your maximum price point, you’re likely to get outbid. Get as much information as you can on the property. Your agent should be in touch with the selling agent and do their best to find out what the condition of the home is and what other offers are being made on the home. Of course the selling agent doesn’t have to give you specific numbers, they’re working for the seller, but if you know how high you can go and they have already received an abundance of offers going higher than that, they will likely let you know.
It depends on the buyer and what they can afford. In the case of an all cash buyer, if you can afford to make surprise repairs - whether that be replacing a roof or an HVAC system, it may be worth the risk. However, if you aren’t financially prepared for surprises, unless you’ve been handed a recent home inspection in advance, it’s likely not worth the risk.
If a buyer really wants the home and your offer is acceptable to the sellers, then absolutely ask to be in back-up offer position. In this market, buyers are sometimes so eager to “win” in the form of getting their offer accepted, that they may find themselves with buyer’s remorse once they compare the price they’ve paid for a home and the actual condition or appraised value of the property. For buyers that haven’t removed all contingencies, there are a number of reasons they may have to back out - the home not appraising, not getting loan approval, or simply realizing the home is not what they were looking for.
Have more real estate questions for Linda? Email her at email@example.com.
"These are hard times to negotiate if you’re a buyer but Linda helped me get a pulse on the market and find the right property sight unseen! She came highly recommended and I can see why. She has 25+ years of living and working in the SD area and is really on top of what’s going on. I was so lucky to to have her as my agent!"