With the NCAA Basketball Tournament officially underway this week, I thought about how much this market feels like “March Madness” to many agents and their clients.
Just to give you a sense of what the market is like out there, look at some home sales that officially closed this past week:
Rancho Palos Verdes
- 30033 Avenida Celestial, Rancho Palos Verdes
- 4 beds, 3 baths, 2,383 sq. ft., 14,735 sq. ft. lot
- Asking Price: $2,000,000
- Closing Price: $2,353,000 (+$353,000)
- 7240 Crest Road, Rancho Palos Verdes
- 4 beds, 5 baths, 3,180 sq. ft., 11,332 sq. ft. lot
- Asking Price: $2,399,000
- Closing Price: $2,720,000 (+$321,000)
- 10 Crestwind, Rancho Palos Verdes
- 4 beds, 4 baths, 3,513 sq. ft., 21,354 sq. ft. lot
- Asking Price: $2,800,000
- Closing Price: $3,300,000 (+$500,000)
Redondo Beach
- 738 Avenue B, Redondo Beach
- 2 beds, 1 bath, 846 sq. ft., 6,102 sq. ft. lot
- Asking Price: $1,595,000
- Closing Price: $1,820,000 (+$225,000)
- 204 Avenue G, Redondo Beach
- 2 beds, 2 baths, 1,239 sq. ft., 6,029 sq. ft. lot
- Asking Price: $1,995,000
- Closing Price: $2,300,000 (+$305,000)
Palos Verdes Estates
- 585 Via Del Monte, Palos Verdes Estates
- 3 beds, 2 baths, 2,032 sq. ft., 11,973 sq. ft. lot
- Asking Price: $2,999,999
- Closing Price: $3,751,000 (+$752,000)
- 3924 Via Nivel, Palos Verdes Estates
- 4 beds, 2 baths, 2,258 sq. ft., 10,359 sq. ft. lot
- Asking Price: $1,799,000
- Closing Price: $2,250,000 (+$451,000)
Hermosa Beach
- 333 28th Street, Hermosa Beach
- 3 beds, 2 baths, 1,236 sq. ft., 2,390 sq. ft. lot
- Asking Price: $2,399,000
- Closing Price: $2,700,000 (+$301,000)
Remember, these are just closings from the last week!
Not every property goes over asking these days, but it has almost become expected with many properties in specific submarkets.
To see extreme moves of $225,000 to $752,000 in a couple deals each month, or even quarter used to be standard. But today, it is normal to see 10+ closing each week hundreds of thousands over asking. That shift of activity like the above examples in just one week shows you the “madness” happening in our local real estate market.
While there have been more homes coming for sale in this traditionally busy spring season in the South Bay, buyers are still ready to quickly gobble up great properties asking fair prices.
And unfortunately, we know these big moves are not ending anytime soon with listings ourselves that are under contract for hundreds of thousands higher than asking. As well as buyers making deals at a premium hundreds of thousands above asking price.
Sellers are in the driver’s seat (duh)…
If you are a potential seller, go to open houses in your neighborhood, figure out which listings are getting a ton of offers, and where those busy listings might close on price. Once a new higher comp is created, you have justification to list and potentially get even more.
Even if you do not do your research in this fast-moving market and severely underprice your home, don’t worry, the market’s very efficient buyers will bid your home up to its true value.
So what the heck is a buyer to do in order to compete?
Here are some “March Madness” tips to apply in today’s wild 2022 South Bay home market:
Stay Flexible
When you are up against multiple offers, how do you stand out to a seller other than price? Sometimes there are terms more valuable than the final number.
- Do the Sellers need a leaseback?
- Do they want certainty/ease today?
- What do they want?
You need to be ready to be flexible to offer terms that are personal and unique to every seller.
If a seller needs a leaseback for a smooth move into their next home, then you need to ensure you have housing to grant that term – or if they want a fast close, be able to get out of your current living situation quickly.
If a seller wants to avoid open houses for personal reasons, be prepared to go to broker’s opens and make offers before the weekend.
Some sellers might want to transplant a fruit tree from their backyard or take all the appliance or whatever. You need to stay flexible.
It might be a specific term that gets you a house, and even at a discount to other offers.
The more you can accommodate, the better your chances.
Get Fully Underwritten
Buyers are up against cash offers, but does cash always win? No!
In order to compete and be the most compelling offer, buyers are going to their bank with all of their financial paperwork to get a fully underwritten pre-approval.
Never has there been a time where I have seen so many buyers with loans operate as if they are cash investors. What do I mean by that?
Any buyer that really wants to push and compete is getting all of their paperwork into underwriters at a bank early. It allows them to get fully approved for a loan with the bank just waiting for them to find a property.
These buyers are making offers like cash buyers – 21-day escrow, no loan contingencies, and if they have the funds, no appraisals. Buyers are making offers at lightning speed like investors too.
In a way, it is one of the few avenues to beat out your cash competition and these buyers are getting selected over investors as a result.
You have to check this box to truly compete on your dream property.
Be Aggressive
This is a lot like what was mentioned above.
Buyers are waiving loan contingencies, waiving appraisals, and being flexible in every way they possibly can.
That all said, you still must be aggressive on price. Look at the jump in prices from the homes at the start of the blog.
I am not saying to grossly overpay, but you must be active in the market to know where homes in escrow will be closing. If you are not making offers, and knowing where the new comps will close after finishing in second or third place, then you won’t have the market knowledge to be confidently aggressive.
And when you are knowledgeable and confident above the coming comps, you know how hard you have to push – and what little bit extra you have to to throw in – to get a home.
Smart aggression wins.
Conclusion
It is “March Madness” in the 2022 South Bay home market that is still ultra-competitive.
I hope you will use some of the strategies above to land yourself a great property. We are rooting for the underdogs.
Have an awesome weekend!