Buyer's Market? Is It Really?

I don’t usually read the paper. I read Patch — local news interests me. Beyond that, I prefer fiction.

But the front page of Sunday’s Homes section caught my eye this last week. The headline read “You call this a buyer’s market?”

The article featured a homebuyer in Minneapolis who searched in vain for two years for a “good deal.” Most of the homes she was targeting were distressed properties that needed too much work. She hung in there for six months on a short sale (they are not short in time), only to have it fall apart.

Many times she found herself bidding against all-cash or strong buyers.

It was a frustrating two-year process, but now she is close to closing on a house that is a good match for her.

This article really hit home for me. It’s been very confusing for buyers who want to find “a great value” and think they want a “distressed sale.”

A distressed sale is generally one that needs work. This may not be the great value a buyer hopes it will be. A regular sale with a motivated seller may actually be a better buy.

With a regular sale, you can ask the seller to fix the dangerous electrical issue that came up on your home inspection. You can expect the home to be delivered to you leak-free, termite-free and with the roof repaired.

With a short sale or bank-owned property, it’s usually take it or leave it. You hope the price you negotiated is a price that makes you feel good about the work that is still needed.

The woman in Minneapolis who searched for her home for two years is not particularly unusual, in my experience. I have a lot of patience for buyers — after all, it is a huge purchase. A big-ticket item and also the place you’ll call home— that’s a big deal. I searched for my new home for more than four years, so when my clients want to search for years and years, I get it.

Most people don’t spend years looking for a home, but it does happen. My husband, by the way, will tell you that we weren’t even looking for a new home when we moved and that he “only saw one house,” but that’s because I was looking for four years and only showed him “The One.”

I wrote an offer in November 2008 for buyers that were relocating from Portland. This was a bank-owned property in Pleasant Hill, priced around $500,000. When the inspections came in, there was cause for concern and my buyers cancelled the contract.

They were a young family — expecting their second child in March 2009, so the home buying project went on hold for a bit. Then they continued to search — getting into contract on another bank-owned home in 2010.

Again there were concerns after inspections. This was a house in severe disrepair — even more than the naked eye could discern.

My clients finally bought their new home in June of this year. It's a great house in Lafayette on a cul-de-sac. Not bank-owned — they were able to ask the seller for some reasonable repairs (ie, the shake roof was nearly dust).

Several of my listings this year have sold quickly, some with multiple offers and some (imagine!) going over-asking. Yes, it’s a buyer’s market — that is, there are more sellers than buyers — but the really good product is still being fought for.

An agent told me yesterday that she showed my new listing in Walnut Creek. “I told them it would go fast.” Her clients wanted to “wait and see.” Sure enough, she was right — this was a special property (see the virtual tour: http://www.tourfactory.com/797328): a home with a gorgeous lot in a nice location and priced to sell quickly.  I had two great offers within three days of hitting the market.

She was able to explain to her buyers that you need to be prepared to leap when you see the house you want. Sure, there are always the homes that come on the market a little too high and sit. But if the home you want is one that is priced right, then it will sell quickly.

That may happen more often than you think: so far this year in the San Ramon Valley (Alamo, Danville, Diablo, Blackhawk, San Ramon) there have been 1,633 homes sold.

How many do you imagine were sold with 10 days or fewer on the market? The answer is 427 -- about 26%. More than you expected, right?

Almost half of those homes (712) sold within the first three weeks. Here’s how it breaks down by town:

• Alamo – 142 sales this year so far; 49 of those sold in 21 days or fewer.
• Danville (including Diablo) – 562 homes sold so far this year; 252 of those sold in 21 days or fewer.
• Blackhawk – 87 sales; 24 of which sold in the first 21 days.
• San Ramon – 842 sales; 393 of which sold in the first 21 days.

Statistics like these make me nod my head in agreement with the comment in article from Sunday’s paper: “Buyers need to be patient for the right house to come along — and when it does, they need to be ready to pull the trigger.”