December 26th, 2013 4:43 PM by Jackie A. Graves
While competition has moderated, Redfin reports that there is still plenty of data, real and anecdotal, to show homebuyers are still highly motivated. Redfin offers that were met with other offers, so called bidding wars, have declined each month from the 75.3 percent incidence in March to 51.7 percent in November. Even though these wars are less common, Redfin reports its agents are finding buyers anxious to get a home under contract before the end of the year, knowing that competition may increase in the new year.
Among Redfin offices Seattle and Orange County (California) had the biggest decline in competitive bidding with declines of 11.8 and 11.4 percentage points respectively. Several cities did see increases, however including Washington, DC (+8.2 percent); San Diego (+5.7 percent), Baltimore (+5.6 percent), and Los Angeles (4.3 percent).
Three-quarters of the homes sold in November in San Jose and 54.3 percent sold in San Francisco sold at their list price and home-sellers getting premiums of 1.8 percent and 0.4 percent respectively. Homebuyers in Chicago and in Orange County were able to negotiate selling prices that were an average of 4.4 percent and 4.3 percent below listing prices.
Redfin says that when it comes to winning offers money isn't necessarily everything. Buyers sweetened bids with offers of all cash, waived financing contingencies, waived inspections, or included a cover letter with the offer. These strategies were used more in November than in October. While the numbers of waived contingencies are not large (except in San Francisco and Boston where 26 percent and 15 percent of offers respectively waived financing) cover letters are a frequent tactic with an average of 35 percent of buyers including one in their offers across Redfin's 22 markets. In Orange Country, and San Francisco that frequency soared to 83 and 61 percent and was above the national average in San Jose, Boston, Seattle and Los Angeles.
"Homebuyers who failed to get an offer accepted early in the year have been stockpiling down payment money all year long," said Amber Hancock, manager of Redfin's San Francisco East Bay market. "They're jumping back in this time as better qualified, more confident competitors, taking advantage of the easing late-fall market."
Home sellers are just sitting around waiting for offers to land in their laps. Redfin agents across the country report that following this year's dramatic home price appreciation, some sellers are purposely pricing their homes well below the market rate, confident that they will attract multiple bidders and the price will escalate well above asking. One Boston area home seller who did this had an open house for his multifamily and had a line of dozens of people waiting outside the door to get in, He received 62 offers.
Sometimes buyers find it necessary to act like Big Buy customers on Black Friday eve. Redfin said in the summer of 2012 some homebuyers camped out in tents for weeks at Shapell's Gale Ranch community in San Ramon hoping to buy one of a handful of new homes being released for sale. Now, forbidden this time from raising tents, prospective buyers are sleeping in their cars at another Shapell development nearby, hoping for a crack at six homes priced under $800,000.