ORLANDO, Fla. – May 6, 2009 – More homes for sale are attracting multiple offers as buyers pursue lower-price homes and banks low-ball asking prices to attract competing bids on foreclosures.
Multiple bids have picked up in recent months in California and other states hit hard by foreclosures and steep price drops, real estate executives say.
“If a house is in a good neighborhood, is maintained and is a good value, it’ll get multiple offers,” says Julie Holt, owner of Anclote Title Services in Tarpon Springs, Fla. One in 10 homes now draw multiple offers, up from one in 30 last fall, she says.
Multiple bids usually signify a market in which prices are rising and buyers outnumber sellers. That’s not true now, given rampant foreclosures, still-falling prices in many regions and low demand for higher-price homes. Multiple offers on distressed properties are also not new, but their recent frequency offers hope for the real estate market, says Beth Peerce, treasurer of the California Association of Realtors (CAR).
“When you begin to see people willing to fight for a property, that’s a good sign,” she says. “We are beginning to see the beginning of the end of a disaster time.”
The competition is driven by prices – California’s are down 39 percent from a year ago, CAR says – low mortgage rates and a new federal tax credit of up to $8,000 for some first-time buyers.
Other hard-hit regions are also seeing more multiple offers, mainly on:
• Lower-end homes. In Phoenix, where prices have dropped 50 percent from their 2006 peak, competition has heated up for homes under $150,000, says Realtor Michael Orr, who publishes the Cromford Report on the Phoenix-area market. He recently considered bidding on one house for $70,000. It had received 14 offers, and Orr was told to bid $110,000 to be considered.
• Good values. Holt just handled a closing on a Tarpon Springs home close to schools that was listed at $185,000. It won three bids and sold at $192,000. Three years ago, the home would have sold for $280,000, Holt says. Higher-price homes are also getting more multiple bids. “People who always wanted to live on the water are realizing it is time to buy before prices go up,” Holt says.
Some bidders may think foreclosure bargains are waning, says Mike Lyon, CEO of Lyon Real Estate in Sacramento. That market has 1,600 bank-owned properties for sale, vs. 2,800 a year ago, he says.
He says banks have lured multiple bids by setting below-market prices. Lyon cautions that government steps to curb foreclosures have delayed some.
“People are perceiving that they are running out. But there will be more,” he says.