The San Francisco Bay Area is a Sellers Market Like Never Seen Before, Take Advantage!
Due to strong demand and limited inventory, it’s almost always a San Francisco bay area sellers market. That is nothing new. But the area became even more attractive to sellers during 2020, due to a stunning increase in buyer demand. In 2021, we have seen more inventory come onto the market. But the San Francisco Bay Area will almost certainly remain a seller’s market throughout 2021.
Let’s talk about all the things you should know, understand and research about the Bay Area sellers market and how your Realtor® can take on all the stresses and help support you through the entire process.
Forbes Magazine, in their June 30, 2021 report, listed the top ten real estate seller’s markets in the United States. Three cities in the Bay Area made that list: Oakland (#1), San Jose (#4) and San Francisco (#5). But what does that mean for you?
Defining Our Terms
A buyer’s market occurs when prices are low and fewer buyers are out there competing. But a seller’s market–which is what we have in the Bay Area–arises when demand outstrips supply. The regional real estate inventory is low, homes sell faster, and buyers–competing with one another–are willing to spend more to secure a property. Other U.S. cities (Rochester, NY, Austin, Seattle, Buffalo, Eugene, Oregon, and Denver, among others) are experiencing these conditions right now, but the complete and thorough benefits to the Bay Area seller are, at the moment, simply incomparable.
But what does all this mean for you and how can your Realtor® help?
Let’s take a moment to look at sales-to-list prices. The sale-to-list ratio is the final sale price (what a buyer pays for the home) divided by the last list price expressed as a percentage. If it’s above 100%, the home sold for more than the list price. If it’s less than 100%, the home sold for less than the list price.
In Oakland, for example, in May 2020, the sales-to-list price was 101%, meaning that buyers were already paying more for homes than the prices for which those homes were listed. Fast forward one year to May 2021, and we see that Metro Oakland properties were at 111%, meaning people were paying eleven percent over the average listed price.
Similar events have been happening in San Jose, with more than two-thirds of the properties going off the market within a mere two weeks. And the San Francisco area has only a 1.2 month supply of homes for sale. All this in spite of the fact that from January 2020 to January 2021, active real estate listings in the San Francisco Bay Area rose by more than 18%. (https://bit.ly/2UOlYfV)
As May has come and gone, agents say buyer fatigue may be setting in, with fewer offers coming in than in previous months. But motivated home shoppers are still pushing up prices in bidding wars–exceeding asking prices by 30% or more in some attractive Silicon Valley neighborhoods.
So what can your professional Realtor® do to help you navigate these wild rapids and make sure you get the best deal?
While all home buyers need to make sure their research is complete, this is particularly true for first time buyers.
The process for buyers in a bay area sellers market
- Come financially prepared. Pre-qualifying for a mortgage is one way to get through the door of sought-after listings where pre-qualified buyers are the only ones who have a shot. Being pre-qualified also means that all those prospective buyers who want to “sleep on it” get shut out while you walk right in with your head held high and sign on the line. As for sellers, what if once you sell, you want to buy a home that better meets your needs? One solution is to buy a brand new home to avoid the resale bidding wars and still personalize the home to your own unique liking.
- Be flexible on closing dates. Some sellers may want to move immediately, and if you can help them close faster, your bid is likely to stand out from the pack. Again, being pre-qualified is a big help here, as is having selected the home inspector in advance, a courtesy the ready-to-move-right-this-second-seller will certainly appreciate.
- Your Realtor® will do market research. As a consequence of this hard but essential work, you the buyer will know which neighborhoods offer what you want, you will know which areas have the lowest inventory and the highest, and you will have gained invaluable insight into what you can expect to pay and receive in return.
- Utilize your resources. More than ever, this means picking a professional Realtor®. Your Realtor® will create a short list of properties that meet your requirements and attainability. And in spite of your own hard work at scouring the Internet for information, the Realtor® is apt to have valuable word-of-mouth awareness and networking listings that the individual buyer cannot access.
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Your Realtor® provides other benefits. Making an offer and negotiating with sellers is often the hardest part for the buyer, but it is your Realtor®’s specialty. Typically, once a desirable property goes in the Bar Area market, buyers begin lining up and offers begin to clog up the landscape. Those offers, as mentioned earlier, will typically be above the asking price. Your first offer will likely need to be strong, at least strong enough to get the seller’s attention. This will help you in working the pricing curve. After all, the sooner you buy a home, the more likely you are to leverage the pricing trend and therefore begin building the equity you need.
But what about sellers?
A smart seller will not just sit back and grin at all the easy money that is sure to come in. There is still a good bit of thought, planning and work involved in the process. Again, here your Realtor® provides essential guidance.
Here is the advice you as a seller should expect to receive:
- Be ready to move out within thirty days. After all, and in case we did not make it crystal clear: The Bay Area real estate market is hot. Have the moving company of your choice on stand-by.
- Know what day to Go Live. In the Bay Area (and in most other markets, for that matter), that means you should know that Thursday is the best day to list your home. They sell for more money and faster than homes listed any other day of the week. But you’ll need more than an up-to-date calendar to make this work to your advantage. Make sure your listing has high-quality images, a 3D virtual walking tour, and videos to showcase your home to the very best effect.
- Staging, staging, staging. Get rid of anything that could conceivably be construed as clutter, run the vacuum (or Roomba) every day, relocate your personal items so they are out of sight, and even think about employing a professional stager who will bring in neutral modern furniture and accessories. Staged homes indeed sell 73% faster than empty homes. (https://bit.ly/3BBbr8m)
- Don’t give your house away. Some first time sellers may drift towards terror about selling their home, especially if they need to get out right away. They will consider listing a price that is simply too low with the idea that this itself will start a bidding war. Your Realtor will absolutely know what comparable sales in your area have been and will advise you accordingly.
Most Important in a Bay Area Sellers Market
Perhaps the best single bit of consultation a Realtor® can provide a seller is to analyze the offers. Bids are not all alike and deciphering the best one for a given individual should not be a lone individual fishing with a net full of holes. Your Realtor® will explain and clarify so that you can exploit every opportunity to your best advantage.