How to know where value lies today

Question for this extremely knowledgeable group - how do you know where value truly lies in today's market? My husband and I put and offer on a northwood home in Irvine and put it what we thought was a decent offer (30 over). The sellers countered asking us to present our highest and best, but they are not giving any color as to what their other offers look like. What should we do in this situation? Offer even more? It feels as though this home is already significantly overvalued as-is (especially considering square footage).

Thank you in advance for any insight!
 
irvinenative1995 said:
Question for this extremely knowledgeable group - how do you know where value truly lies in today's market? My husband and I put and offer on a northwood home in Irvine and put it what we thought was a decent offer (30 over). The sellers countered asking us to present our highest and best, but they are not giving any color as to what their other offers look like. What should we do in this situation? Offer even more? It feels as though this home is already significantly overvalued as-is (especially considering square footage).

Thank you in advance for any insight!

It is very common for the seller to send out best & final counters to buyers when there are multiple offers (I do that all the time). When you say that the home is overvalued, what do you base that on?  If it's closed comps then all homes are overvalued because looking at closed comps, even as recent as a month ago, will make just about every home seem like it's overpriced. Most agents will not provide much if any guidance of where other offers are, why should they. I deal with best & final multiple counter offers with my buyers all the time today.  I typically give my buyers a range of X (if you bid below you won't get it) to Y (if you bid to Y you have more than a 50/50 shot of getting the home) on what to offer on a home.  The more that they like it and that it checks their boxes, the higher in the range they should bid.  Anything over Y is too much and if someone else is willing to bid higher than that then so be it.  Don't bid against yourself just because their are 5, 10, 15, or more offers....bid the maximum that you are willing to pay for the home. Good luck!
 
irvinenative1995 said:
Question for this extremely knowledgeable group - how do you know where value truly lies in today's market? My husband and I put and offer on a northwood home in Irvine and put it what we thought was a decent offer (30 over). The sellers countered asking us to present our highest and best, but they are not giving any color as to what their other offers look like. What should we do in this situation? Offer even more? It feels as though this home is already significantly overvalued as-is (especially considering square footage).

Thank you in advance for any insight!

This is one of the worst parts of buying resale. Sometimes it makes you wonder if you are negotiating against yourself (although in this market there do seem to be a lot of homes with multiple offers from what folks say here). We ended up buying new construction and didn?t have to deal with the counter situations anymore
 
Inflation is here, and everyone is buying stuff to get out of cash...whether a house or bitcoin. 
I'm surprised GOLD is still around $1800.
 
zubs said:
Inflation is here, and everyone is buying stuff to get out of cash...whether a house or bitcoin. 
I'm kind of surprised GOLD is still around $1800.

I think Bitcoin has taken over for Gold because it's more sexy to say that you own. But I agree with you, I'm buying 2 rental properties with a partner and eyeing my ultimate unicorn home (single story 3-car garage view lot home) so if your realtor is in acquisition mode that should tell you something.
 
Code:
[pre]
[/pre]Sometimes you need to play the sellers game.

Other times, you need to pressure the seller to play yours. 

My read, you already came in over their ask, you got no guidance. I'd stand pat and see if the other buyers, if they exist, make the call.

If you really love the home and have failed multiple other offers, evaluate your prior $30K over offer on the psychological dollar scale.  Did it crest or just fall short of a mental barrier? I.e $1.5m, 1.75m, $2m.  And the slightly lesser $1.6m etc. Jimho.


If you're bidding over ask and its not an obvious bidding war bait listing, always time bind your offer to short them waiting out best and finals.  Make them present and answer before they circle back for the bidding war or wait for a boatload of people to track through all weekend.
 
nosuchreality said:
Code:
[pre]
[/pre]Sometimes you need to play the sellers game.

Other times, you need to pressure the seller to play yours. 

My read, you already came in over their ask, you got no guidance. I'd stand pat and see if the other buyers, if they exist, make the call.

If you really love the home and have failed multiple other offers, evaluate your prior $30K over offer on the psychological dollar scale.  Did it crest or just fall short of a mental barrier? I.e $1.5m, 1.75m, $2m.  And the slightly lesser $1.6m etc. Jimho.


If you're bidding over ask and its not an obvious bidding war bait listing, always time bind your offer to short them waiting out best and finals.  Make them present and answer before they circle back for the bidding war or wait for a boatload of people to track through all weekend.

I've tried this strategy and it doesn't work in this market when there are multiple offers (i.e. putting in an offer over list with a 24-hour expiration).  The agents just responded with a best and final seller multiple counter offer 2-4 days after I submitted the offer.
 
My clients just bid $60k over list, agreed to 10 day contingency removal, and agreed to "as-is" (i.e. the seller won't fix anything surfaced in the inspection) for a condo. Close...but no cigar. Finished in second position.

So, you've got to be willing to lose the home if you want to call the seller's bluff.

To USC's point...the market isn't scaring away investors. Rental market is strong and with historically low interest rates, some listings still make a lot of sense for investment purposes.
 
USCTrojanCPA said:
zubs said:
Inflation is here, and everyone is buying stuff to get out of cash...whether a house or bitcoin. 
I'm kind of surprised GOLD is still around $1800.

I think Bitcoin has taken over for Gold because it's more sexy to say that you own. But I agree with you, I'm buying 2 rental properties with a partner and eyeing my ultimate unicorn home (single story 3-car garage view lot home) so if your realtor is in acquisition mode that should tell you something.


@USC would you please give this more color based on your superior knowledge of real estate and finance. When inflation is high, how will that impact the real estate.
 
best_potsticker_in_town said:
My clients just bid $60k over list, agreed to 10 day contingency removal, and agreed to "as-is" (i.e. the seller won't fix anything surfaced in the inspection) for a condo. Close...but no cigar. Finished in second position.

So, you've got to be willing to lose the home if you want to call the seller's bluff.

To USC's point...the market isn't scaring away investors. Rental market is strong and with historically low interest rates, some listings still make a lot of sense for investment purposes.

I've even started seeing a few counters where the sellers want the buyers to remove all contingencies right away (probably because they have a few cash buyers).  No way would I let my financed buyers remove all contingencies unless they understand and are OK losing all of their deposit if the crap hits the fan (I still advise against it).
 
I don't think inflation is solely a real estate issue. The same economic principles applies to all facets. High inflation = more money circulating. If there's more money circulating then people are willing to pay more for goods in order to outbid the next person. Prices go up, simple as that. You then have homeowners that see the prices homes are selling for and will decide to sell their homes too until prices stabilize because of increased supply. That's market equilibrium.
 
the.irvine said:
USCTrojanCPA said:
zubs said:
Inflation is here, and everyone is buying stuff to get out of cash...whether a house or bitcoin. 
I'm kind of surprised GOLD is still around $1800.

I think Bitcoin has taken over for Gold because it's more sexy to say that you own. But I agree with you, I'm buying 2 rental properties with a partner and eyeing my ultimate unicorn home (single story 3-car garage view lot home) so if your realtor is in acquisition mode that should tell you something.


@USC would you please give this more color based on your superior knowledge of real estate and finance. When inflation is high, how will that impact the real estate.

Simple economics...if inflation is high then all hard asset prices will tend to rise because there is more dollars chasing the same assets.  With real estate you even have 2 other factors that add it is a good inflation hedge...1) Cost to build will keep increasing which is an underlying driver of real estate and 2) If the inflation rate is higher than your interest rate on the home you are amplifying your financial leverage on real estate because inflation is eating away at your nominal loan amount.
 
USCTrojanCPA said:
nosuchreality said:
Code:
[pre]
[/pre]Sometimes you need to play the sellers game.

Other times, you need to pressure the seller to play yours. 

My read, you already came in over their ask, you got no guidance. I'd stand pat and see if the other buyers, if they exist, make the call.

If you really love the home and have failed multiple other offers, evaluate your prior $30K over offer on the psychological dollar scale.  Did it crest or just fall short of a mental barrier? I.e $1.5m, 1.75m, $2m.  And the slightly lesser $1.6m etc. Jimho.


If you're bidding over ask and its not an obvious bidding war bait listing, always time bind your offer to short them waiting out best and finals.  Make them present and answer before they circle back for the bidding war or wait for a boatload of people to track through all weekend.

I've tried this strategy and it doesn't work in this market when there are multiple offers (i.e. putting in an offer over list with a 24-hour expiration).  The agents just responded with a best and final seller multiple counter offer 2-4 days after I submitted the offer.

No harm then is there, they still countered later.

With the sellers market, they can afford to wait. 
 
USC - what gives you enough confidence in the OC job market to invest now in rental properties, especially given the eviction moratoriums that seem to be moving towards codification in bright blue CA? OC job market seems more unstable than ever.
 
At the end of the day, people have to live in a home. Investment properties will always be "stable" investments.
 
Keep in mind the agents are responding. Just keep in mind. They won?t bring up the economy, they won?t talk about the rent freeze.
 
OCtoSV said:
USC - what gives you enough confidence in the OC job market to invest now in rental properties, especially given the eviction moratoriums that seem to be moving towards codification in bright blue CA? OC job market seems more unstable than ever.

Because of what I hear from my clients, that their companies and businesses are doing as well or better than pre-covid.  I see the huge demand from buyers, builders stopping all incentives, and strong rental demand.  There was only one person that I know that had an issue with their tenant...this is where tenant selection becomes very important.  Yes, the lower end of the job market is shakey but professionally employed folks are doing well.  I also believe that significant inflation is coming and rates are still low.  My partner and will be closing on 2 rental properties with 25% down with fixed rates at 2.99% where we will basically be breakdown on cashflow so we are very happy.
 
eyephone said:
Keep in mind the agents are responding. Just keep in mind. They won?t bring up the economy, they won?t talk about the rent freeze.

I just go by what I hear from my clients and what I see with my own eyes. Unlike other realtors, I'm actually putting my money where my mouth is, literally speaking, when I tell my buyers that if you plan on living in a home for 5+ years it's fine to buy. 
 
Even if you have an agent. I say do your own research. I remember when I was looking for a house back in the day. I would always have the high end houses shown to me. Also, she did not like to haggle or make low ball offers. At the end we stayed with her, but I did the research and found the house. I didn?t have time find a new agent.

At the end of the day. You will make the payment and not the agent.
 
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