Battle scars are everywhere as another banner real estate year draws to a close here in Los Angeles. To make matters worse, it’s an enticing 80 degrees outside and everyone seems stressed to the max with the holidays on the horizon and no time to enjoy them since the traffic is out of control.
In the midst of all this bliss, buyers are still feverishly running around trying to see the few new listings that might push them into the ultimate hell of trying to comply with inspection deadlines and other escrow requirements while trying to enjoy all the holiday cheer.
One would assume that these buyers must have nerves of steel to be putting themselves through the emotional anxiety of a year-end accepted offer. Yet, it’s just the opposite. It reminds me of the baseball announcer yelling, “It’s a swing…and a miss.” What could these buyers possibly be thinking to have let themselves be outbid on two houses in the last five days?
What is a buyer to do when there are multiple offers chasing their American Dream? Can you possibly “win” in a multiple-bidding situation? Or are you just bidding against yourself? It’s perfect capitalism. It’s pure, free-market theory at its best.
To make matters worse, in both cases, the listing agent has (cleverly, I might add) responded to all the offers with a counter that simply says, “Best and Final Offer.”
You’re a well-qualified buyer and you’ve “made the first cut.” You can either pat yourself on the back or bang your head against the wall for not making your first offer strong enough to blow everybody else out of the water.
Or you can analyze the situation ad nausea and try to figure out whether the seller will recognize that you are the smartest and nicest person in the pack and really do deserve this house – even if you don’t have the highest bid. Oh, and by the way, you’re willing to waive the appraisal and loan contingencies so that must count, right?
So, they decide to “hit the ball hard” and “take it to the hoop” and when they fax back their counter – thud! A mediocre response from the buyer at best – but really even more disappointing is when the reality hits us that they will not win the bidding war with this newly suggested multiple-offer response.
When asked about their really “soft” best and final offer, the buyers say that, “friends advised them not to get caught up in a bidding war.”
“Not to get caught up in a bidding war?” I am completely floored by this response. “They’re in a bidding war!” I said. “Doesn’t that at least validate that there are five other people who think this house has a great deal of value even in this market?”
“They think that their offer should be evaluated on its own merits” was the response that came back to me. “And they don’t want to be bidding against themselves.”
Wow. Knock me over with a feather.
“I thought the point of these bidding wars is to win,” I exclaimed. “So then you can really decide if you want the house or not.”
“Exactly,” came the response. “Because losing seems completely pointless if you had already made up your mind that it’s a house that you could see yourself in,” my husband continued. “It’s one thing to lose if you’re unsure about the house, the location, the price, etc., or you just can’t afford to bid it up to a higher level.”
“And it’s another if you lose just because you don’t want to play the game,” I chimed in. “A kiss from your sister.”
Doesn’t a bidding war exactly characterize the incredible beauty and dynamics of the real estate universe? Several strangers who will never know one another and may never even know what they are each bidding are suddenly in a space where they are competing for something that they each want really badly and have not, as of yet, been able to find. It’s like an asteroid spinning out of control towards earth.
An emotional roller coaster from hell.
Like a silent auction without the lunch or dinner first.
If the real estate market does eventually slow in 2005, you can bet that the bidding wars will get even more intense as there are fewer and fewer great houses on the market, and a lot of mediocre overpriced ones left to pick through. I’m just hoping that it will give all those people who are waiting for the crash a moment of satisfaction as they wonder if they’re buying into an unknown up or down market.
As for me, the holidays bring me a great gift. My remodel will be (hopefully) done before New Year’s day and so there’s a lot to be thankful for.
Julie Brosterman is a consultant to the real estate technology, mortgage and servicing industries. She lives in Los Angeles and can be contacted at firstname.lastname@example.org.
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