Vol. 274 - Stop Digging Holes!
My dog and I are at an impasse. I want him to quietly lie in the garden and Buck wants to dig holes. I respond by planting more shrubs in the shady areas he loves and he thwarts me by finding another spot in which to dig. I can't say I appreciate being "out-foxed" by a dog. In fact, I find it rather frustrating, but he's a dog, and dogs DIG.
Unfortunately, I don't think this is a battle I am likely to win, given that I'm at work all day while he's got free run of the yard, but I'm not entirely willing to surrender either. Thus, he digs, and I plant - each of us trying to "out-fox" the other.
The truth is, no one likes being out-foxed in any situation and it's especially difficult in today's marketplace where Buyers are rarely alone at the table and are often compelled to spend quite a bit more than they had anticipated. If you're not lucky enough to be Midas, it can be rather frustrating to watch home after home go to more aggressive (or richer) Buyers who can waive their inspection and appraisal conditions and close in mere days, as opposed to several weeks. Shucks!
"This whole process seems rather obscure," one Buyer recently confided. "Why can't I know what the other offers are so that I could decide whether or not I want to pay more?" Gee, wouldn't that be nice for us all?
Buyers would be able to quickly decipher whether or not they could realistically compete and their Realtors could save a tremendous amount of time NOT writing offers that probably don't stand a chance under current circumstances (Hmmm. . . it may be worth considering).
Of course, I'm not sure that Sellers who have now realized tremendous gains and are in possession of a unique commodity, would benefit from open bids as much as they do from a closed process - nor necessarily, would Buyers . . . Typically, when multiple offers come into play, there is often a clear winner; one that is usually well ahead of the rest of the pack.
It's not that the winning Buyer has "overpaid" for the house; it's that savvy Buyers understand the nature of the contest and are willing to set themselves apart in order to avoid a "multiple counter" response; one in which the decision is likely to become a popularity contest (at which point, they'll have NO control over the outcome). In short, these educated Buyers want the house and are willing to set the market value to get it.
Conversely, when only one offer is up for consideration, the Buyer usually has the advantage of bidding below the list price (once again, Buyers are setting the market value). And while that doesn't necessarily describe our current marketplace here in the Bay Area, it's important to remember that markets are cyclical and we've just come off of several tough years where Buyers have had the upper hand. Even with the dramatic shift, there are still many communities outside of the Bay Area where homes can still be purchased for less than asking (what a concept).
Fortunately (or unfortunately, depending on how you see it) this is the Bay Area, and given that you WILL in all likelihood, be bidding against several other Buyers on almost every home this Spring, it helps to have a Realtor who understands the nuances of the game, knows the other players in the mix, is well respected by his/her peers, and clearly understands the standard practices in each specific marketplace. (Take my word for it, terms vary greatly from region to region.) Without these advantages, you may find yourself "out-foxed" and at a real disadvantage.
Recently, I have spoken with several Buyers who have struggled with saying good-bye to their out-of-area agent, in order to work locally. And while I appreciate the strong bond created in the search for a new home, your loyalty will probably come at a heavy cost to you and perhaps, in the form of missed opportunity. (Just because I vacation in Tahoe, doesn't mean I know the marketplace there.)
By way of illustration, a few months back, I received a preemptive offer on a listing here in town, e-mailed to my inbox from an out-of-area agent who probably thought they had "out-foxed " the rest of the buying public by declaring early. (They hadn't.) Nearly everything with the offer was wrong, from the price, to transfer taxes, to their demands. At which point, their offer was politely declined and when a slightly modified offer was resubmitted come the offer date, it was declined once more - a repeat rejection. (Ouch, that really hurts.)
The truth is, their offer missed the mark on every single level - and the worse part of this story is that their agent probably didn't even know what mistakes he had made.
So if you have changed your geography by more than a few miles (I'm talking different cities, not different neighborhoods) it's probably time to reconsider your representation. If you are still feeling torn, ask your Agent to make the referral, which gives him/her an opportunity to recoup a little of their time and some of the lost commission. Granted, it won't be the same pay-out as a full sale's commission, but you're much more likely to actually achieve the intended goal of home ownership, and that should be your Agent's goal for you as well. Otherwise, we're all just digging holes.
So plant your garden. . . our spring market is in full bloom and it is thriving!
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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.