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Buyers are paying $ 1 million above the sale price on homes

2021-06-20T23:45:30.157Z

In many hyper-competitive markets where cash offers that are well above the asking price are standard rates, buyers have found some amazing ways to stand out.



Demand for housing increases, mortgage rates also 1:00

(CNN) -

What do homebuyers have to do to get a home in this cutthroat housing market?

Offering sellers a Caribbean vacation?

Offer $ 1 million above the asking price?

Paying a competing bidder hundreds of thousands of dollars to withdraw?

What about buying two houses just to live in one?

Believe it or not, these are real deals.

And sometimes, they really work.

"You hear buyers add sweeteners to the mix (wine, dinners) to buy the house," said Esty Perez, an agent for Knipe Realty in Portland, Oregon.

"Then a buyer comes in and says, 'Hold my beer.'

Let me take care of this.

Pérez said one of his clients was in a bidding war for a $ 530,000 home and offered $ 25,000 over the sale price.

The other top bid was just $ 15,000 more.

But that buyer also added 10 ether coins, which, in early May, when Ethereum was trading at $ 3,900, were worth nearly $ 40,000.

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"We couldn't get over that," Pérez said.

“My client was unable to offer any crypto to counter that.

It was ridiculous.

In many hyper-competitive markets where cash offers that are well above the asking price are standard rates, buyers have found some amazing ways to stand out.

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Buy two houses to get one

Would you buy two houses just to get the one you really want?

A buyer in Austin, Texas, did.

Competing with 50 other bids for the home, the buyer offered more than $ 100,000 above the sale price, all in cash, according to Thomas Brown, agent and founder of The Agency Texas, which represented the buyer moving to Austin from the San Francisco area.

But that offer was matched by other buyers.

So to seal the deal, Brown's buyer offered something extra: to buy the seller's next home.

In total, the buyer paid $ 1 million for a $ 500,000 home, Brown said.

“Buyers come here to live in $ 1 million apartments and see that they can buy a 280-square-meter house for less.

They're saying 'Even if I pay more, do I only come in with $ 1 million?'

“Brown said his buyer was concerned that putting all the money in the house they wanted would cause property taxes to skyrocket, so they preferred to put the extra money into a new house for the seller and keep it in a separate transaction .

This new home in Austin was sold by the Thomas Brown firm and sold for $ 560,000 above the sale price.

Brown understood the seller's needs and their plans for an upcoming purchase.

Together with his buyers, they worked out a deal that had two separate transactions: the home the buyer wanted, which was priced at $ 400,000, and a new home for the seller, which was listed at $ 300,000.

Both exceeded the listing price and were paid in cash by the buyer.

"Regardless of price, there are multiple offers on every home right now," said Brown of the Austin market.

"I've never seen anything like this and the reality is that it won't stop anytime soon."

Adam Pugh, a real estate attorney and partner at the Cagle Pugh firm in Austin, said buying two houses to get just one is pretty far-fetched, but creative.

"While we see people coming from all over the country overpaying for Austin real estate, I've never heard of anyone buying the next home from a seller as an incentive," he said.

"But honestly, it's not even that surprising."

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Money, much more money

A three-bedroom mid-century home on a cul-de-sac in Berkeley, California, with a sweeping view of the San Francisco Bay was almost a one-of-a-kind property, said Jill Carrigan, an agent for The Grubb Company, who listed it in your sale list this spring.

"It ticked all the boxes for a lot of people," he said.

“I have never had a property with 29 offers and the buyers increased their offers without us even countering.

The San Francisco Bay Area is always competitive, but this is something I've never seen before. "

Priced at $ 1.15 million, the home sold in two weeks for $ 2.3 million in cash, double the asking price.

Priced at $ 1.15 million, the home sold in two weeks for $ 2.3 million in cash, double the asking price.

Neither Carrigan nor the vendors, who had begun preparing to move to Texas, anticipated that it would go that far.

But this offer was clearly impossible to pass up.

"People are getting very creative with their offerings," Carrigan said.

“Sometimes if it's a final photo and someone adds tickets to the Warriors, it could be the tiebreaker.

But, at the end of the day, it is money and a clean offer that generally win.

More people have been paying a lot more this year for a house.

This home in Berkeley, California, had 29 offers when it went up for sale.

The Berkeley home was just one of hundreds of homes in the US that sold for $ 1 million above the asking price this spring;

There were 310 of these sales nationwide in March alone, according to Zillow, up 74% from last year.

And paying half a million dollars over the sale price is not even that rare.

There were more than 940 sales that were more than $ 500,000 above the sales price in March, according to Zillow, double the amount last year.

Removing obstacles

Buyers with the cash to offer amounts that are significantly above the asking price certainly have the upper hand, pushing first-time buyers and qualified home buyers in need of a mortgage lower on the seller's list or off the list. completely.

This has served to widen the wealth gap in the US, making it almost impossible for low-income buyers to invest in a home.

But sometimes money is not the obstacle, other buyers are.

Brown said he sometimes learns about the main competition from the seller's agent.

That's when, he said, some of his buyers paid another major buyer to get out of the bidding.

In one case, he said, the buyer offered more than $ 100,000 to the competition.

"They are buying time and opportunities," he said.

The seller gets a better deal.

The other potential buyer gets something to walk away with and my client offers more and gets the house. "

While this type of offer can get attention, Brown said it works as long as it is known to all parties, both the buyers and the seller.

Pugh said that in that situation, ideally all parties understand how the deal will go through, but it would not be legally necessary.

Buyer one could pay buyer two to back out and not even involve the seller, he said.

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It may be a small comfort to homebuyers who repeatedly miss out on deals, but there are buyers who have made big changes, putting everything they have on the table and still have crossed it off.

Michael Perry, an agent in Salt Lake City, said one of his buyers noticed sports memorabilia while touring a house.

The buyer made an offer to buy the house and gave two season tickets to any local sports team, he said.

"It was a good idea, but we lost it," Perry said.

Even if the buyer wins the offer, sometimes the extra gift is just too strange.

In another case, Perry represented a vendor with a beautiful garden. He said the winning buyer sweetened his offer by allowing the seller to continue to use the garden and backyard for up to five years after the sale. "That was a little weird," Perry said. But very nice of him. They won the tender, but I don't think the sellers will.

There was a buyer Perry worked with who made an offer that he thought was a

grand slam

: The house was listed at $ 1.95 million and his buyers offered $ 2.75 million in cash, closing in a week.

Perry said his buyers offered a $ 500,000 non-refundable security upon acceptance, in addition to allowing sellers to stay in the property for six months to a year until they found their next home.

"They gave them everything," Perry said.

"The only thing they could have added was to bring a bag of cash with the offer."

They still lost the offer, Perry said.

Sellers left with a buyer who essentially matched that offer, Perry said, showing that, in this market, the package is never far behind.

"We are devastated," he said.

I didn't know what anything in this world meant after that.

Market

Source: cnnespanol

All news articles on 2021-06-20

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