What Does Offering $45,100 Over Asking Price Get You?

What on earth is going on? One of my clients is on his 4th consecutive over-asking offer. They all failed. This time he pulled out the big guns, offering $45,100 over the asking price, and guess what? He didn't get the house!

This climate scares me. I see the craziness of 2005/2006 all over again. My buyer clients are no longer in the market to buy a home, but in a battle against other consumers to pay the highest price possible.

Where will it go from here? Will we learn from the real estate market crash that is still in our very fresh memories?? If you are a buyer, you NEED to work with a reputable and knowledgeable buyer agent. There is no way you can navigate this alone. If you try, good luck to you! Buy a shredder to dispose of all the checks you'll be tearing up from all the rejections!

Real Estate Marketplace Shifts Drastically

For any of you who know me or follow me, my stance on 2012's local real estate market was pretty straightforward. The market will get flooded with foreclosures and short sales, supply will exceed demand and prices will deflate. My crystal ball must have been broken.

For any of you who have kept a pulse on the north-of-Boston real estate market, we experiencing market dynamics similar to 2005. I am currently working with two cash buyers and one word that describes both their current state of mind is FRUSTRATED. Completely and utterly frustrated.

Here's a snapshot of my marketplace. Within one week, one of my clients placed two offers. Property number 1 was a multi-family in Medford, Massachusetts. Ready for this? We were one of 15 offers, our offer was 85% cash, we offered $30,000 over the asking price and .... drumroll ... My client didn't get the house.

We also placed another offer on a multi-family in Melrose, Massachusetts. I admit we didn't have the financial firepower needed to truly be contenders on this property, but nonetheless, we were one of twelve offers!! I was eventually told that the offers on the table were substantially higher than asking price. What on earth is going on?

I understand that our mild winter allowed consumers to gobble up whatever properties might have been on the market over the typically slow real estate period, but nonetheless, I never expected this sort of climate this quickly.

Here's the real problem. Home prices are now being set by the competition surrounding the property. My other clients, also cash buyers, saw a property in Malden, Massachusetts that they liked, but the asking price was NOT in line with the real value of the property. It was surely overpriced. I recommended to my clients that they be careful in getting excited about this one. I told them that I didn't feel it was worth one penny over $265,000, but the reality of the situation, NO INVENTORY and TOO MANY BUYERS would cause a bidding war. That was indeed the case. I could not allow them to buy something for at least $40,000 over what the property was actually worth.

Hey, hold on Joe! Doesn't supply and demand define market prices? It sure does, but I needed to step back a moment and learn from the very hard lessons many people DIDN'T learn from during the 2000s.

What a shift. Good luck out there. I surely hope you are working with a buyer agent to help you navigate through this. If not ad you are looking north of Boston, you know who to call, right? ;)