Bidding Wars Surprise Buyers And Sellers
By Lisa Scontras
It’s economics 101. When there is a shortage of widgets, the price of widgets goes up. If there is a shortage in oil, then the price of oil goes up.
The same goes for the housing market. When there is a low supply of properties for sale, the homes that are on the market command more money. It is simple supply and demand.
According to Carl P. Worthy, sales trainer and coach at Prudential Locations, this is today’s new reality – and sellers can benefit from the unique timing.
“There is very little inventory out there, which is creating a competitiveness among buyers,” says Worthy. “We’re seeing lots of multiple offers on one property, where buyers bid against each other – bidding up the price.”
The onset of buyer competition on properly priced real estate offerings was one of the take-aways from last month’s State of Hawaii’s Real Estate forum. What this can mean to sellers is more money. Worthy says that except for some leeward areas, these bid-up situations are happening all over the island.
“Oahu has an inventory problem right now,” he says.
The current low inventory of available homes for sale coupled with low mortgage interest rates has provided the spark needed to ignite local sales activity – and is changing the home-buying landscape.
“Buyers see the value of their buying power with low interest rates,” Worthy says. “They realize that rates are not going to remain low forever and many have finally decided to get out there and start looking.”
One buyer, who wanted to remain anonymous, was actually surprised to see how competitive the market has become in a relatively short period of time.
“We put in a full-price offer on a house in St. Louis Heights last week,” she said. “We included a clause that said we would go $500 over the highest bidder up to a defined point, and we ended up not even being a back-up offer.”
Such a quick turnaround in Oahu’s market dynamics may be hard to believe, especially if you aren’t out there buying or selling right now.
“I recently listed a unit for sale at Hawaiki Tower in Kakaako at market value,” says Marshall Mower, Prudential Locations Realtor and Partner. “In the first two days on the market, I had several showings that resulted in three offers.”
Sellers in many neighborhoods, particularly those closer to town, are seeing multiple offers, according to Mower, who adds there are some things sellers can do to fire up a buying frenzy for their home.
First, pricing the property slightly below or as close to the current market value as possible is the best way to attract buyers – lots of them. Second, be ready to show as it’s important to ensure access to as many buyers as possible, especially during that first week. Third, make sure the listing sparkles as presentation counts.
“Bidding wars are typically an indication that the market has turned in that segment of the market,” says Mower.
He also cautions that there are still some neighborhoods on Oahu where the market is more sluggish, with more inventory and less demand.
“It is important to understand that while there are sellers in many segments of the local real estate market who are enjoying multiple offers, this is truly not the case everywhere in Hawaii,” says Mower. “You really have to look closely at the current sales activity in each neighborhood or in each building to understand current market value. After careful analysis and research, with the help of your Realtor, you can come up with the best pricing strategy.”
The recent revival of Oahu sales – complete with multiple offers and bidding wars – can be pinned on low interest rates driving heavy demand by buyers looking to score while their buying power is strong. And while eager buyers storm the market, it’s a win-win for sellers too.
THE STATE OF HAWAII REAL ESTATE
PART 2 OF 3
An overview of the big picture as well as what’s going on in your neighborhood
Coming April 10:
Every neighborhood is its own market