Limited Inventory Ups Prices
A property’s list price is increasingly irrelevant to the ultimate sales price.
The old real estate mantra of “location, location, location” has been replaced locally by “inventory, inventory, inventory.” Or more specifically, in the Bay Area, the lack thereof.
With low inventory comes higher prices, especially for those looking to buy in walkable or luxury neighborhoods of the coastal East Bay. Yet with the right strategy, savvy timing, and some seriously local knowledge, the dream of Bay Area real estate is still attainable—for some.
Access to an assortment of online tools allows prospective buyers to do a lot of the legwork before working with an agent. But with so little inventory, Red Oak Realty’s Deidre Joyner believes it is essential to work with real estate agents and lenders who understand the hyper-local microclimate of East Bay real estate.
“Working with an experienced agent, one who understands all the moving parts—what’s available, the pricing strategy, how many offers are in play, buyer desire, and necessity—are the ingredients needed to successfully put a buyer into a home that fits their budget and needs,” Joyner said.
Across the state, sellers routinely underprice their listings by 5 percent, according to the California Association of Realtors. But here in the East Bay, due to paltry inventory, low interest rates, and heightened demand, sellers discount the price of their homes by upward of 20 percent. This strategy instigates bidding wars and ensures 100 percent turnout on pre-qualified buyers.
“Pricing a home is a balancing act and an art,” Joyner said. “If you overprice your home and only get one offer, you have nothing to negotiate against.”
Consequently, many homes throughout the region are selling substantially above their asking price, often with multiple offers in the hard-to-resist cash variety.
“An appropriately priced home in today’s market will get multiple offers and provide the leverage needed to close the deal,” Joyner said. “List price means nothing; it’s part of the marketing plan. It’s like a starting auction price.”
One of Joyner’s lenders recently referred to her a couple who had been working with an out-of-area agent. With little understanding of the nuanced differences from house to house, or even block to block, the couple’s agent wrote offers on several homes to no avail.
“Without taking into consideration the newer pricing strategies and lack of quality inventory in the area, their original agent was putting in offers on homes they couldn’t afford,” Joyner said. “Had I worked with them from the beginning, I could have saved them a lot of time and money and gotten them into a home months earlier. I don’t mean to sound cavalier, but it’s all part of the game.
”This is no idle boast. Joyner’s reputation as one of the area’s most successful agents has been rightfully earned. The well-respected real estate saleswoman holds the 2014 Top Producer title at Red Oak’s Montclair location and has held the title companywide since 2010. Joyner recently closed a sale with almost 10 offers in play, but she knew her buyers could make a cash offer, so she asked them to come up a bit.”
If you know your cap is $650K, you start looking at homes priced closer to $500K,” Joyner said. “I knew how many offers and for how much. This knowledge gave me the leverage to come in at a fair price for everyone.”