The number of price reductions for homes above $1.5 million has picked up in Lamorinda and is the likely result of the recent tempered Bay Area IPO market over the last 6 - 9 months. Historically the tech IPO market has provided the fuel to drive real estate prices higher in the Bay Area as employees trade their stock options for dream homes. In the past month my inbox has been filled with agents advertising price reductions in Lamorinda . While it is uncertain this trend will continue (as in recent weeks pre-IPO companies like Uber have raised large sums of money), the recent price reduction trend has resulted in contentious escrows as sellers are reluctant to realize they have a little less leverage than in recent years.
Most sellers still feel that they are in control and can demand prices above last year’s levels but today both buyers and sellers are figuring out how leverage has shifted. A good example of this is in mid-June I wrote an offer for clients on a house that had recently done a $25,000 price reduction. The new price was in my client’s price range so they decided to write an offer at the new asking price. They wrote a clean offer with good terms without a loan contingency. The listing agent informed me that there were no competing offers. My clients were surprised when they received a counter offer asking for $10,000 more than the reduced asking price. After several discussions my clients decided not to accept the counter in hopes that the seller would come around.
Unfortunately, the next day the seller received another offer and went into contract. The drama continued when two days later the listing agent called back to inform me that the current buyer backed out and asked if my clients were still interested. Not wanting to lose the house again my clients agreed to pay the additional $10,000. In this particular case my clients accepted the seller’s terms but the seller did not get his original asking price, leaving the seller disappointed and the buyers feeling they over paid.
While our market continues to be a seller’s market because of the lack of inventory – sellers have less leverage as often there are not buyers in back up position or because sellers have been forced to reduce their listing price to get buyers interested. If you are thinking about selling your home make sure that you and your realtor look at the most recent comps. Prices from the beginning of the year for certain homes are very different from prices going into the summer months. Set realistic expectations and come up with a solid pricing strategy especially if you are in a position where selling your home quickly is vital.
Please email or call with your real estate questions. I can be reached at firstname.lastname@example.org or by phone (925) 951-3817.