Vol 224, Walking on Water?
"You evidently walk on water," a prospective client e-mailed me. "My friend, Carol, raved about you . . ." Gosh, that's nice to hear and I love the validation, but were it only true! While I'd happily lay claim to the ability to casually stride across H2O, the only water I'm walking on these days are the puddles that last week's heavy storms brought en masse. (Help, my roof is leaking. Quick, somebody get a bucket!)
Unfortunately, I've spent the past month writing offers that have come in second and just between you and me, it's less than thrilling news to deliver to my earnest Buyers, all of whom have written with strong conviction.
Let's face it, "back-up" position isn't my goal for you and I know it isn't yours either; securing the home, is.
It's doubly difficult to deliver disappointing news when these excellent offers should have been high enough to carry the day - and would have been just a few months ago. But therein lies the problem; we can't work on last month's numbers or even last week's. Those comps can only represent past sales, not future activity or even today's current market performance.
In order to come out ahead, you must accept that the numbers aren't driven by last week's sales, but by this week's Buyers, who are quickly increasing in number and magnitude. (The public offering of Facebook is set to create 2,000 new millionaires alone and they'll be entering the market in the next year or two. Talk about stiff competition!) So while the basic math of surrounding sales certainly informs our offer, it doesn't begin to tell the whole story - does it?
So what happened?
What "happened" is that the market reached its "Tipping Point."
In response, focused, committed, and knowledgeable Buyers are flooding in to take advantage of rock-bottom interest rates and opportunities they now recognize are rapidly on the rise. With little inventory from which to choose, the few good, available homes are selling quickly and often, with surprising results, as evidenced by the slew of multi-million dollar sales San Francisco has recently been experiencing. (Hey, SF Buyers, come on over to Piedmont. We're downright affordable when compared to pricey SF real estate!)
Given the increased pace of activity, it's critical that you understand that this isn't a negotiator's marketplace any longer, it's a competitive one - certainly here in the Bay Area anyway (If it's negotiation you seek, you'll need to focus on the properties no one else wants or alternatively, move to Modesto?) With multiple offers from which to choose on too few good properties, you may only get one shot. In other words, don't over think it and DON'T hold back. While it may be tough for Buyers to shift their thinking so quickly, the reality is that each new successful sale drives the price of the next, higher still. As has always been true, "value" is a moving target, which is why it can be incredibly difficult to craft the winning bid.
"I don't envy you," a friend said over the weekend, "How do you do it?"
I do it with faith and the understanding that Buyers are often well served and educated by these near misses (no experience is ever wasted). I know that each missed opportunity fine tunes the next and while it may be difficult to have "faith" in the moment when you have just lost the house you dearly coveted, there will be others (there will). While competition is WAY up, so too is Buyer optimism, and that's a very positive change after the last four dismal years. Once again, Real Estate has become a valuable commodity.
(BTW- both faith and one's ability to recognize and define "value," improve with practice! Granted, I've undoubtedly had more practice than you, but I have faith in your ability to catch on quickly, even in a dramatically shifting marketplace as this one is clearly shaping up to be. With the Internet at everyone's fingertips, Buyers have never been more astute.)
So no, I don't walk on water (I'm way too fallible for that) but I have spent a good deal of time swimming in it. AND I've learned that the best way to achieve your goal, is to swim with the tide.
Quick, grab a swimsuit and some flippers. Unfortunately, the towels are now on my living room floor sopping up the rain!
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Julie Gardner, has been writing The Perspective for 18 years and has published more than 670 essays on life and real estate.