Bend Home Buyers Need A Great Real Estate Agent to Work With
Ask any Bend real estate agent right now how the market is, and the answer will be "crazy." In this time of the Covid-19 pandemic, home buyers are flocking to Central Oregon and buying Bend homes faster than they can be listed. This is resulting in a severe shortage of available homes for sale and in turn, a huge increase in the number of multiple offers on these properties.
Often referred to as a "bidding war," multiple offers can drive the price of a home up beyond the listing price and often the winner is the buyer willing to offer more money with better terms than the other buyers. Having an experienced real estate agent to work with is essential to help a buyer win the home.
Can't I Just Offer Low and Expect the Seller to Counter Higher?
In this time of low inventory, buyers need to go all out on their first offer in order to even be considered if the property has just hit the market and there is a lot of interest in the home. For properties that have been on the market for a while, there may be room for some negotiation. However, even in these situations we are often seeing sellers stick to their price. If the sellers are represented by a good local broker, they will know what is happening in the market and are often unwilling to accept anything less than list price. For listings that have just hit the market, the demand for these properties can generate many offers. We are seeing buyers coming in with their initial offer many thousands of dollars over asking price. Although we would never recommend this, some are even waiving their home inspection, thereby removing a significant contingency to their purchase which is normally negotiated with the seller.
What is an Escalation Clause?
For those buyers willing to put their top offer out, the use of an escalation clause can sometimes be the difference between getting the home and not. Basically, an escalation clause modifies the buyer's offer by a set figure (often $1000) over the next best offer up to the top price for which the buyer is willing to purchase the home. A good escalation clause will also require the seller to provide proof to the buyer of the next best offer, taking into consideration any seller concessions and personal property which may be included in that next offer. Within our brokerage, we have seen escalation clauses used successfully many times. Sometimes the next best offer also has had an escalation clause incorporated into the offer which can create added cost to the home's purchase.
If the buyer is purchasing the property with a loan, the lender will typically demand a home appraisal be done in order to verify that the purchase price is not above what the home is worth when compared with like property in the market that have already closed. When a bidding war drives the price up, whether or not the home will appraise can be a problem. However, if the buyer is purchasing the home with cash, there is no issue as the home does not need to appraise. This is often why in a multiple offer situation, when a cash offer comes in that may be less than another offer which involves a loan, the winner may be the buyer purchasing with cash. We have seen this happen multiple times and for those buyers offering with a loan, it can be extremely discouraging.
In our opinion, as long as there is the kind of demand we are seeing with little new inventory coming onto the market, we will continue to have multiple offers with Bend home purchases.
