usctrojancpa
Well-known member
trematix said:
One of my buyers bid on an interior lot Plan 3 for in the high $700/sf range and wasn't even close per the sales office so we are thinking it sold for over $800/sf.
Where the market is - Buyer Offers
- Thread starter usctrojancpa
- Start date
NEW -> Contingent Buyer Assistance Program
One of my buyers bid on an interior lot Plan 3 for in the high $700/sf range and wasn't even close per the sales office so we are thinking it sold for over $800/sf.
Not really, the main reason they won't accept it is that they don't understand how it works and don't want to look stupid in front of their seller (that's the majority of agents who won't accept it). The other groups of agents that won't accept an escalation clause are old-school agents who think it's not fair/cheating. Very few agents have used an escalation clause (mainly because they don't know how it works and/or have never seen on in real life). I first saw escalation clauses at work during my commercial real estate finance days in 2005-2008 when financing multi-family acquisition loans when that market was on fire.
My success rate helping buying purchase a home when an escalation clause was accepted was 90%+ and the only few times that I lost out where when the highest offer was an all cash offer (mine was financed) so the seller wanted to take the cash offer versus my clients' higher offer. I only ran into 1 situation during the 2 year price ramp where another agent used escalation clause on a home that I submitted an offer on (my buyer got the home because our max price was higher than theirs).
The Trovita open house was very busy when I went with my clients given how low the listing agent prices the home. I told my client that an offer between $1.92m and $1.951m would give us a good chance at getting the home, anything over $1.951m was too much given the home needed to have the bathrooms remodeled. They really liked the home and offered my maximum suggested price but obviously someone else wanted it more so more power to them, I don't let my clients pay stupid prices.
Exactly, just goes to show how realtors who are lazy and/or not sharp can cost the seller a significant amount of net sales proceeds.
One of my buyers bid on an interior lot Plan 3 for in the high $700/sf range and wasn't even close per the sales office so we are thinking it sold for over $800/sf.
usctrojancpa
Well-known member
I thought I'd update this thread as I've made a few offers for buyers this month...
I made an all cash offer with a 14 day close on 52 Bamboo of $1.21m initially and we responded with a buyer counter of $1.245m to the multiple seller counter (they had 5 offers) and we didn't get the house. The same model match closed for $1.25m in April 2022. This listing agent would not accept an escalation clause.
www.redfin.com
I made a financed offer on 9 Trovita of $1.85m initially and we responded with a buyer counter of $1.951m to the multiple seller counter (they had 10 offer because they significantly under priced the home) and we didn't get it. This listing agent would not accept an escalation clause.
www.redfin.com
I made an all cash offer with a 14 day close on 52 Bamboo of $1.21m initially and we responded with a buyer counter of $1.245m to the multiple seller counter (they had 5 offers) and we didn't get the house. The same model match closed for $1.25m in April 2022. This listing agent would not accept an escalation clause.
52 Bamboo, Irvine, CA 92620 - 3 beds/3 baths
(CRMLS) For Sale: 3 beds, 3 baths ∙ 2146 sq. ft. ∙ 52 Bamboo, Irvine, CA 92620 ∙ $1,225,000 ∙ MLS# OC23007106 ∙ Welcome to 52 Bamboo, a gorgeous 3-bed plus loft home in the prestigious gated community of N...
I made a financed offer on 9 Trovita of $1.85m initially and we responded with a buyer counter of $1.951m to the multiple seller counter (they had 10 offer because they significantly under priced the home) and we didn't get it. This listing agent would not accept an escalation clause.
9 Trovita, Irvine, CA 92620 - 4 beds/3 baths
(CRMLS) For Sale: 4 beds, 3 baths ∙ 3118 sq. ft. ∙ 9 Trovita, Irvine, CA 92620 ∙ $1,809,000 ∙ MLS# OC23006817 ∙ Welcome to this expanded & remodeled turnkey home in the gated community of Canyon Cree...
Liar Loan
Well-known member
You may have explained this before, but is there any good reason for them not to accept an escalation clause?
usctrojancpa
Well-known member
Not really, the main reason they won't accept it is that they don't understand how it works and don't want to look stupid in front of their seller (that's the majority of agents who won't accept it). The other groups of agents that won't accept an escalation clause are old-school agents who think it's not fair/cheating. Very few agents have used an escalation clause (mainly because they don't know how it works and/or have never seen on in real life). I first saw escalation clauses at work during my commercial real estate finance days in 2005-2008 when financing multi-family acquisition loans when that market was on fire.
My success rate helping buying purchase a home when an escalation clause was accepted was 90%+ and the only few times that I lost out where when the highest offer was an all cash offer (mine was financed) so the seller wanted to take the cash offer versus my clients' higher offer. I only ran into 1 situation during the 2 year price ramp where another agent used escalation clause on a home that I submitted an offer on (my buyer got the home because our max price was higher than theirs).
usctrojancpa
Well-known member
The Trovita open house was very busy when I went with my clients given how low the listing agent prices the home. I told my client that an offer between $1.92m and $1.951m would give us a good chance at getting the home, anything over $1.951m was too much given the home needed to have the bathrooms remodeled. They really liked the home and offered my maximum suggested price but obviously someone else wanted it more so more power to them, I don't let my clients pay stupid prices.
Liar Loan
Well-known member
That's what I figured. It's just easier for them to be lazy and not accept it. And so because they don't want to look stupid, they are costing their sellers tens of thousands in net proceeds.... which in actuality is completely stupid!
usctrojancpa
Well-known member
Exactly, just goes to show how realtors who are lazy and/or not sharp can cost the seller a significant amount of net sales proceeds.
sgip
Well-known member
If working with a buyer wanting to purchase in a very tight market neighborhood, it might make sense to mail every owner a postcard asking "Heard what a Sales Price Escalation Clause is? Call me for more info" as owner / sellers are leaving dollars on the table as their realtors chase pennies. A well informed seller might leapfrog over these agents that take the path of least resistance that penalized sellers by not working to achieve a "highest and best" value outcome.
irvinehomeowner
Well-known member
@usctrojancpa
So during this "drop"... what are the main differences between now and during the "hotness" of the last 4-5 years (yes... even 2020 was still hot because prices were higher than before 2018).
There are probably less buyers because of higher rates but with lower listings, it would seem like it's still competitive with other buyers based on your most recent post.
So during this "drop"... what are the main differences between now and during the "hotness" of the last 4-5 years (yes... even 2020 was still hot because prices were higher than before 2018).
There are probably less buyers because of higher rates but with lower listings, it would seem like it's still competitive with other buyers based on your most recent post.