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REALTOR®: Low inventory fuels prices, heightens competition for homes

Wednesday, March 20, 2013

The shortage of inventory continues to constrain sales and fuel California home prices. The California Association of REALTORS® reports the state's median home price marked a full year of annual price gains, while a lack of inventory slowed total home sales for the month. Home buyers continue to face stiff competition due to the shortage of inventory.

Closed escrow sales of existing, single-family detached homes in California were down 5.9 percent from sales in February 2012. The statewide February median price of $333,880 was up 24.2 percent from $268,810 recorded in February 2012, marking a full year of annual price increases and the eighth consecutive month of double-digit annual gains.

"With an imbalance between supply and demand, home buyers have been fiercely competing with each other. More than half of home sales are receiving multiple offers, with homes getting an average of four to five offers, and some even more," says C.A.R. vice president and chief economist Leslie Appleton-Young.

MLSListings Inc. reports inventory has dropped each month from the prior year for 21 months in Santa Clara County and 20 months in San Mateo County. Santa Clara County's inventory of single-family homes in the month of February was down 52 percent from the same time last year. In San Mateo County, inventory of single-family homes in February dropped 44 percent from February 2012.

Due to high demand and the shortage of homes, the median home sales price continues to rise. Santa Clara County's February median sales price of $712,250 was up 32 percent from the median of $540,000 in February 2012. San Mateo County's February median of $800,000 was up 36 percent from $589,000 recorded in February last year.

Carolyn Miller, president of the Silicon Valley Association of REALTORS®, says it is important that buyers work with a knowledgeable and experienced REALTOR®, especially in a market that is seeing more multiple offers than traditional sales. "Getting the bid is critical, especially if you are up against 10 other buyers. Both REALTOR® and buyer need to work closely as a team if they are serious about getting the bid."

Miller shares good business practices she advises buyers to follow in this competitive marketplace:

  1. Carefully review all of the disclosures and documents provided by the listing agent.  Buyers need to "look under the hood" and learn as much as they can about the property, so their REALTOR® can advise them how to make their offer. If there are termite or roof concerns, the buyer needs to be aware of what's involved and the expense of any corrective measures.
     
  2. Prepare a "love letter" about the house. 
    The letter should be from the heart, telling the seller why they chose this particular house. Sellers who have lived in and loved their home want to know that the next owners will continue the care and love they have put into their home. 
     
  3.  Be prepared to follow the calendar. 
    Everything in a real estate transaction is according to the calendar, so parties have to move quickly. Buyers need to understand that "time is of the essence" and they could breach a contract if they delay. "The buyer and agent need to be connected at the hip," adds Miller. "If the buyer plans an out of town trip, they need to coordinate any papers that might need to be signed ahead of that time and be sure they can connect with their agent when they are away."
     
  4. Be open and honest with your REALTOR®. 
    Buyers (and sellers) need to be open and honest with their REALTOR®. The REALTOR®, in turn, should be very honest with them. "I always stress openness and honesty in every transaction," said Miller. "I do not want to sell my buyers property they will one day regret. I don't want them to wonder when it's time to sell why no one wants to buy their property."



The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.

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