The Bay Area continues to be characterized by low inventory, increasing prices and a lot of competition.

In fact, a recent study shows housing prices leaping by nearly 15 percent from just a year ago. In March, the Bay Area entered a new price stratosphere: a median price of $820,000.

Despite rising prices, future homeowners continue to mobilize with hopes of landing their very own home in one of the world’s most beautiful regions. Many homes in the Bay Area, due to the type of market, are selling for over asking price, and in many instances, sellers are reviewing dozens upon dozens of offers, which prompts competition.

Here are some things both sellers and buyers should know when it comes to bidding wars.

 Things sellers should know:

  • Some real estate agents representing the seller will list the home lower than market value to create bidding wars.
  • Real estate professionals cannot predict what areas will produce offers well over asking price. There are always surprises.
  • Real estate professionals are using a range of pricing strategies. Therefore, as a seller, work with real estate professionals who know Bay Area inventory in and out to maximize your property.
  • Some agents who understand the over-performing market may not price the homes well under market price in an effort to not mislead buyers.

 Things buyers should know:  

  • Follow the market patterns, and work with Guarantee Mortgage to secure a loan before doing any shopping.
  • Take advantage of your resources and come ready with cash, if you can. The best-case scenario may be to submit an all-cash offer, especially in an investor-saturated market. If you do finance with partial cash, consider waiving some contingencies that may speed up the deal.
  • In a market accustomed to multiple offers, a personal touch may help. A personal letter outlining your intentions and goals as a future homeowner may sway the seller to side with you. Selling a home is just as emotional as buying one. Your letter may connect with the seller.
  • Don’t be afraid to practice patience. While the market is robust, and also unpredictable in terms of knowing what the final price will be, don’t feel the need to stay the course and overstretch your budget. Take advantage of resources and specialty loan programs that will protect your investment – even if it takes you a little longer to find the home of your dreams.

A home buyer in the Bay Area that plans to pay cash for their home, and wants to recoup those funds after closing, may wish to consider a delayed purchase finance loan This allows a borrower to pay cash and then use a cash-out refinance to get that cash back within 90 days of the close date. Essentially, the home buyer submits the loan as a purchase loan and then all of the money is returned to the borrower, other than the down payment.

If you have any questions, please contact us!