In March 2020, the San Diego housing market entered a period of uncertainty. Although the year started off with strong sales activity and rising home prices, lower mortgage interest rates and concerns about the future of the American economy caused the market to cool down. Economists at the California Association of Realtors expected a shift from a seller’s market to a more balanced situation, one that would give prospective buyers more leverage. With this in mind, it would be easy to assume sellers would be more willing to entertain lower bids, but this may not apply in every situation.
Market conditions in downtown San Diego don’t always move at the same pace as the rest of the metropolitan area. It’s not unusual for condos and lofts to be in higher demand, which means sales activity is greater compared to single-family residences in gated communities. The experienced professionals from 92101 Urban Living, a premier source of information and expertise about downtown San Diego real estate, offer the following things to know in relation to making offers on condo listings.
Be Mindful of Market Conditions
Prospective buyers should determine the kind of market they’re in, which can be done by getting the opinion of real estate agents and reviewing the business section of local newspapers, such as the San Diego Union-Tribune and the San Diego Business Journal. In the first quarter of 2020, market conditions in the downtown districts were still in favor of sellers, which means offers that tried to shave more than 10 percent off listed prices were likely to be rejected. If you’re really interested in a specific property, you should leave room for a counteroffer.
Avoid Getting into Bidding Wars
When sellers entertain multiple bids, the potential of overpaying for a condo increases significantly. The problem with bidding wars is they often tap into buyers’ irrational behavior, which usually results in making unsound financial decisions. Real estate negotiations don’t have to be adversarial. Limit the bargaining to the initial offer and one counteroffer.
Make Reasonable Offers
Your real estate agent can tell you if a listing is overpriced based on factors such as automated valuation model appraisals and pencil calculations based on comparable sales. When a listing is asking more than 10 percent over the market price, an offer that’s 20 percent lower than the asking price wouldn’t be unreasonable, and the selling broker will likely be aware of this. On the other hand, offering 20 percent below the market price wouldn’t be reasonable unless conditions are heavily tilted in favor of buyers.
Make Sure Your Real Estate Agent Is Working for You
A broker who refuses to present an offer that’s reasonable based on the market price isn’t someone you want to have on your side. If the pencil appraisal indicates the listing price is overvalued by 15 percent, your real estate agent shouldn’t balk at presenting an offer 25 percent lower than the asking price. Should you run into this situation, you can always look for another agent.
If you’re shopping for downtown San Diego condos for sale and you want to get the most for your money, make sure to work with agents who have experience in the downtown San Diego real estate market. For the best advice about buying a downtown San Diego condo, loft, or penthouse for the lowest price, rely on the experts from 92101 Urban Living. Give us a call today at 619-649-0368.