Publication Date: Wednesday, March 13, 2002
Pent-up demand leads to multiple offers, rising
by Carol Blitzer
Some call it the trickle-up theory: First someone sells a $500,000
home and buys "up" to a $1 million home. The $1 million
homeowner opts for $2 million, and so on. That's what Miles McCormick,
an agent for Coldwell Banker in Menlo Park, calls a "normal
"In the last couple of years, some in tier two automatially
got to move to the highest tier. That's not the case anymore,"
he said, noting that today's high end is fueled by professional
people looking to move up.
After a slower 2001, with properties sitting for two to three months
before selling at prices mostly below 2000, the market is already
picking up for 2002.
"We sort of crossed the corner at New Year," said Paul
Engel, a Coldwell Banker agent in Palo Alto. "A lot of people
on the fence decided to move. Mortgage rates are down, money is
available. They've sat and watched. . . . A lot of people came to
the same conclusion at the same time."
With people entering the market who've been holding back often
comes multiple offers.
"Our inventory is low and that's why we're seeing multiple
offers," said Sheri Hughes, Fine Homes & Estates Seville
Contempo, Los Altos. "History has shown that first quarter
is the strongest quarter. It's supply and demand. They're fighting
over the same houses."
Denise Monfette-Trollope, a Coldwell Banker agent in Palo Alto
agreed, saying that just about every home she has sold recently
has had multiple offers. Her prognosis for the coming months? "I
think we are into a very good, stable, steady market."
Even with multiple offers becoming more common, most Realtors were
taken by surprise when a four-bedroom, two-bath, 1,900-square-foot
bungalow in Midtown Palo Alto attracted 39 offers, driving the $740,000
asking price to $1.152 million.
While sellers adore multiple offers -- and quick sales -- buyers
are not anxious to go back to the scary days of 1999 and 2000 when
it was common to find eight to 10 offers on a single home. Too often
they were priced out.
That trend, however, seems to be coming back.
Carol MacCorkle, a Menlo Park Coldwell Banker agent, made an offer
on behalf of a client in February that was 11 percent above the
asking price -- and didn't get the house, which had three offers.
"We can't advise them in terms of price, but we have to show
them reality. We're starting to see some comparable sales and can
help them come up with fair market value. In a rising market, it's
hard to target exactly where that is. . . . Last fall, we kept hearing,
'has the market hit bottom yet?' Now we can clearly say, prices
have hit bottom and there's a bounce back up," she said.
Janet Dore, who works out of the same Coldwell Banker office, said
in addition to multiple offers, agents are starting to set dates
for offers to be presented, much like in 2000.
"We had packages ready for people to pick up. We give everyone
a level playing field so each person can present an offer and the
sellers can look at all the offers and decide what's best for them.
"We're seeing a frenzy up to about $1.5 million, and some
frenzy under a million," she said.
With inventory low -- about 50 percent of last year at this time
-- it's not surprising to find multiple offers and rising prices.
In addition, the local economy seems to be picking up, despite the
national recession, noted Art Scott of Coldwell Banker, Los Altos.
"This may be a blip in Silicon Valley," he added.
Even in the hot Midpeninsula market, there are pockets of more
or less activity. In East Palo Alto, for example, prices seem to
be going down, in the 5 to 7 percent range, said Maria Prieto, a
Palo Alto Coldwell Banker agent who specializes in East Palo Alto
"The prices became inflated. They went up and up," she
said, adding that the price correction had to come. She isn't seeing
many multiple offers, and houses are sitting for two to three months
on the market. "In 2000 they sold in a couple of weeks,"
Thirty to 40 percent of the buyers in East Palo Alto are first-time
homebuyers; many others are investors, she said.
Chuck Atwell, of Alain Pinel Realtors in Los Altos, does a lot
of business in Mountain View. There he finds that "prices are
starting to go up, strictly a result of supply and demand, but going
up from their lows."
"We may see 2000 prices again this year, probably 3 percent
below 2000. We're already seeing a huge recovery. If our inventory
doesn't at least quadruple by summer, we'll see a rough market for
buyers and a good market for sellers," he said.
In the upscale Woodside and Portola Valley areas, those high-end
homes have mostly hit bottom, said Scott Dancer, who works for Coldwell
Banker's Woodside office. "Sellers have decided they're not
going to go any lower. Prices last year made a big adjustment."
While multiple offers are common at the lower end -- say under
$1 million -- they're rare when you get above $2 million, he said.
But that doesn't account for pent-up demand.
"Last year, buyers went on the sidelines for a year, unsure,
waiting for prices to go lower. This spring, we'll see prices firm
up. We're not going to see a decline in the list price of properties,
those that are priced fairly," he said.
"Last year it didn't matter how it was priced, there just
weren't buyers. Most own another house on the Peninsula and have
been wanting to move to a larger or smaller house, but they were
afraid to move, fearful that they might be selling their property
at the lowest possible price, that the stock market might snap back
and prices go up radically. People don't think that will happen,"
For sellers, it's a very good time to list their houses, said Monica
Corman of Alain Pinel in Menlo Park, again mentioning pent-up demand
and some signs of real strength.
She points to real estate as a "reasonable investment. The
stock market has been disappointing. Real estate is something you
can see and touch and feel. It can be a very stable investment,
certainly subject to downturns, but it has a stability to it."
E-mail Carol Blitzer at firstname.lastname@example.org
Advice to buyers:
** "Get with a good buyer's agent, with experience representing
buyers in multiple-offer situations. Negotiating becomes utmost.
. . . Do your homework before you hit the market." -- Art Scott
** "Don't wait too long. If you can afford a house now, that's
priced 20 to 40 percent lower than two years ago, don't hesitate.
Look at cycles. . . . People who buy in 2002 will look back later
and say 'it was a good time to buy.'" -- Scott Dancer
** "Ask how many buyers they've worked with in the past and
their success rate in multiple-offer situations. ... You need an
agent to be totally honest without sugar-coating." -- Chuck
** "If the house is there that you like and want, go forward
and make an offer you're comfortable with." -- Sheri Hughes
** "Start making offers. Chances are (you) aren't going to
connect on the first two or three things." -- Paul Engel
** "Take the plunge and go for what you want. Nobody knows
what the future has in store for us." -- Denise Monfette-Trollope