For several months, the Westside real estate market has experienced a steady recovery with both average list and sales prices increasing by more than 4%. The inventory level of homes available has dropped significantly over the past year, resulting in increasing frustration for buyers who are well qualified but unable to find a suitable home.
Steady Building Up of Pent Up Demand Over the Last Several Months
In addition, there is a fairly large inventory of homes that have been leased since they were not able to be sold over the past few years. The owners of these homes are actually prospective sellers who are open to negotiating with well qualified buyers even while they still have tenants in place.
Some of the consequences of this market are interesting to observe. Due to the obvious supply-demand imbalance, multiple offers have become more common, especially in the lower-priced ranges. In addition, many buyers have become both anxious and frenetic in their pursuit of a home that will meet their needs.
Increasing Number of Homes Are Being Sold Without or Before Being Made Available in the Usual Public Multiple Listing Process
In fact, it is reported that one Westside company has had more than 25% of their sales over the past year transacted in this way. Contributing to this development is the fact that many homeowners would like to sell but don’t believe that the market is strong enough to list in the usual way.
Instead, they have often encouraged agents to bring prospective buyers to their homes and to present an offer if one is made. This has resulted in the unusual situation of a “shadow inventory” with a fair amount of people who really do want to sell, but don’t realize that the market is much healthier than it has been for the past few years.
Owners who do sell in this manner without the usual high-exposure in the open market place will never know how much more successful the sale might have been. When normal marketing does occur in the current market climate, far more well-qualified buyers have the opportunity to see the home and the potential of multiple offers increases. More interest in the home often leads to a far greater sales value.
For example, we recently put a local home on the market with vigorous advertising and high energy Internet exposure, and advised agents and their prospective buyers that offers would be responded to after one week. The result of this process was that the seller received 9 offers, and the eventual winning bidder was 12% higher than the initial listing price.
Obviously every situation is unique and many sellers have understandable reasons to allow their home to be sold without vigorous exposure. However, they need to be aware that they may have left value on the table by agreeing to limited exposure in this heated up market climate.