It probably comes as no surprise to anyone who lives in the Bay Area and has access to local news reports: The real estate market in San Francisco and all over the Bay Area continues to have rising sales prices caused by fierce demand, and multiple buyers bidding on almost every home or condo listed for sale. Many homes sell significantly over their asking prices and median sales prices continue to rise rapidly. This has been the story for the last several years. What’s different this year?
Fewer winning bidders pay cash. The percentage of buyers paying cash has decreased (at least according to trends seen by analyzing buyers and sellers at my company, the largest brokerage in San Francisco). We still see many all cash buyers including foreign investors, tech buyers and empty nesters moving into the city, but traditional buyers—those who need a loan, that is, still have a chance.
Accepted Offers with Buyer Contingencies. We are beginning to see offers with financing contingencies being accepted by Sellers, too. This is a change. For the last few years, most accepted offers had no contingencies at all! Not for financing, not for appraisals, not for inspections of the property. In many cases, buyers were choosing to waive all their conditions because they believed this made their offers more compelling. We are starting to see this shift.
More price reductions. Unlike traditional real estate markets where Sellers offer their homes and Buyers present offers for less than the asking price and then the parties negotiate, most homes in San Francisco are priced at or below market value (based on sales of recent, relevant sales). Buyers then bid, often over asking and the Seller selects the best offer—which may not be the highest one, but often is. The selling price is often significantly over asking. When a home is presented with an asking price that is too high, many buyers forget that they can offer less than asking. Instead, they ignore the house and wait for the Seller to reduce their price. We are seeing several cases where Sellers are listing their homes too high (the logic: my neighbors got a crazy amount for their home and I think mine is nicer, so let me price even higher. Mistake!)
It is a terrific market for Sellers, and a more challenging one for Buyers. That said, I have been successful working with both Sellers/Trustees and Buyers in these current market conditions. It requires persistence, creativity and good strategy. Feel comfortable contacting me to discuss the market or how I can help you, your clients, friends or neighbors be successful in reaching their real estate goals.