I just copied and pasted an e-mail I sent out to some friends… you may want to read.
This is a outgoing e-mail I am sending to everyone who has expressed interest in Bay Area real estate as of late. A sudden chain of events today, Monday Jun 23rd has confirmed to me that an obvious shift in market sentiment is taking place. Just for future buyer’s awareness, certain pockets in the Bay Area are experiencing a dry up of inventory along with a tremendous bidding war on distressed properties around the way. I just had two confirmed situation ( happened this morning ) in which the buyer put in offers at a 30% premium above listing price only to find out the banks selected another offer, being people are buying with more cash and higher prices. Banks are hanging onto inventory but they are selectively and strategically releasing these properties for sale at prices that are higher then before. PLEASE BE AWARE of strategic pricing, that is banks listing properties at very low prices only to entice bidding wars that end up driving the prices to well beyond 30% premium. For example, and hypothetically speaking… a 3 bedroom distressed listed at $115,000 last week. My client put in an offer at $150,000 and still did not get accepted. The following is a break down of how these investors are coming up with their final and best offers.
property listed at about $115,000.
3 bedroom 2 bath in decent location.
You are able to rent the house for $1500 very easily.
not much work required in fixing.
investor offers $150,000 based on the following numbers.
with a standard 20% downpayment loan, you are looking at about $30,000 down payment and a $120,000 loan. monthly conservative estimates would be inbetween $800 to $1000 including mortgage/taxes/insurance.
you still are able to cash flow about $500 per month! So then you will have some investors willing to bid even beyond this price! and thats when you have what was a property listed at $115,000 now going for $150,000+ ! and of course there are always the all cash types who have the true upper hand.
*Also be aware that select banks are looking to sell properties back to the city/county by the blocks, who knows what the city will do with the properties there after.
*The above example was just in a lower price bracket, the same situation is going on for multi unit properties and properties ranging from $300k to $500k as well.
This is crazy but it is the truth, people see the true value in bay area real estate and they have been oversold it seems. When will we see a turn around? who knows, but for now people/investors are buying thats all that matters to these banks.
This is just an update for those who have conveyed interest in buying real estate this year in taking advantage of the window of opportunity given by the discount in home prices as well as the government stimulus / home buyer’s credits.
I wish everyone the best in acquiring the potential money maker but even more so for the first time home buyers. The Bay Area is prime real estate and the flagship for great real estate.
hope all is well.
Jesse Sung
Independent R.E broker
c: 510.593.9667
fax: 415.520.5199
http://www.thebayishome.com