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Homes go to the highest bidder

By Judy Martel · Bankrate.com
Friday, June 28, 2013
Posted: 5 pm ET

For the first time in years, prospective homebuyers are coming up against a hurdle that all but disappeared during the housing bust: fierce competition from multiple buyers.

Agents and brokers across the country, particularly in popular areas such as California, are reporting that buyers are now resorting to bidding wars to obtain a home in a market where few are for sale.

Rick Sharga, executive vice president of Carrington Mortgage Holdings in Santa Ana, Calif., estimates that 70 percent of the homes sold in California have multiple bids. "In parts of California, there's less than a month's supply of homes on the market," he adds.

Lack of inventory across the country is the driving force behind bidding wars, Sharga says. Both new and existing homes remain at lower-than-normal levels, and foreclosure activity has slowed significantly. "All three categories are weak, though they're starting to loosen up," he adds. And there's added pressure in some popular areas of the country where investors have scooped up the supply, making it even more difficult for individual buyers to move quickly on a home purchase.

But buyers shouldn't give up, Sharga says. Low mortgage rates and home prices mean that "affordability is really attractive now," he adds. "Basically buyers should exercise patience and prudence." He advises house hunters to take these three steps to prepare for their search:

  1. Know what you can afford: If you're not preapproved for a mortgage, at least be pre-qualified.
  2. Research the type of property you want to buy before you begin your search.
  3. Be diligent about looking at all opportunities.

He adds that working with an aggressive real estate professional will increase your odds. "It's amazing what low (housing) inventory levels will do," he says. "We know of agents who are knocking on doors of homes that aren't for sale and asking the owners if they are interested in selling."

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3 Comments
Kyle McKenna
July 03, 2013 at 7:34 am

'High demand and low inventory'? Maybe in DC, Manhattan and coastal California, but in most of the country it's exactly the opposite of that.

Jack Neuman
July 02, 2013 at 6:09 pm

Are these the same "Brokers" that told us in 2005,06,07. "You better buy now because housing is increasing in value 20% and doesn't look like the market will stop increasing in value".
Why didn't they forsee the "bubble". You think they have a self-interest in creating "Panic buying". Real Estate brokerage is just another name for "Caveat Emptor".