Written by Nathan White, Chief Investment Officer of Paragon Wealth Management

This is an interesting article for anyone interested in
buying or selling a home in the current environment.  Many regions in the
country are now experiencing a lack of supply which has given the sellers the
upper hand.  It’s certainly a different market than the last few years to
say the least.

To view the article, please visit bloomberg.com

Here is an excerpt of the article:

Strategies for the Spring Housing Scrum

By Carla Fried

It all seems so quaint now: the casual walk-throughs,
the drives to check out the neighborhood, the luxury of sleeping on the largest
financial decision you’ll likely ever make. Trying to buy a home now feels
more like being thrust into the trading pit at the Chicago Mercantile
Exchange — the frenzied bidding, the need for lightning-fast decisions,
the packs of sharp-elbowed competitors.

one fraught situation, a home near Union Station in Washington, D.C., drew 168
offers in December and sold for almost twice the asking price. In the tonier
neighborhoods of Los Angeles, 20 bids per house is not uncommon, according to
real estate agent David Kean. And the speed of deals can be intense.
“In the middle of a snowstorm we have seen houses sell in one day,”
says Sam Schneiderman, owner/broker at the Greater Boston Home Team agency.
“At open houses on million-dollar homes you are literally bumping into
people, it’s that crowded.”

Finding an Edge

dearth of homes for sale has run smack into a suddenly energized buying crowd
egged on by rising values. The National Association of Realtors says the number
of existing homes on the market in January — 1.74 million — was 25
percent lower than a year ago, and the lowest level since 1999. Over
the past 12 months the inventory of existing homes for sale has dropped from a
6.2-month supply to a 4.5-month supply, the lowest level since 2005. 

is obviously the main lever in all deals. What’s particularly important now is
to understand how the seller will handle bids. Some collect all bids and
immediately choose a winner, typically the highest offer, which is often more
than the asking price. Other sellers give the top three or five bidders
the chance to make one counteroffer. In those instances, you want to get into
the bake-off but leave yourself room to counter.

today’s tight market, some sellers are asking every bidder to counter. That’s
what happened to a client of Schneiderman’s in the recent sale
of a house in Newtown Center, Massachusetts, listed for $975,000. The
seller got nine offers — four to nine offers is the norm
now, Schneiderman says — and asked for counter bids on all
nine. Schneiderman’s client bid $1,016,000 and lost. The seller’s agent
said the winning bid was “significantly higher.”

gain an edge in counteroffers from the start, you can put an
escalation clause in your original offer. With one of these, you agree to beat
the top offer by $5,000, up to a limit. So if you bid $380,000 and have a
$5,000 escalation clause up to $400,000, that means if another bid comes in at
$385,000, you automatically agree to $390,000. 

price, buyers need to craft an offer that screams “I’m easy” to the seller.
That starts with the buyer’s agent getting vital intel from the seller’s agent
on what buttons to push. Some sellers are in a hurry to close. Others would
love an extra month before escrow to coordinate their move. Sometimes letting
the seller stay in the home for a month or more,
rent-free, after a fast close can provide the seller valuable breathing
room that seals the deal……….

To view the rest of the article please visit: bloomberg.com

Paragon Wealth Management is a provider of managed portfolios for individuals and institutions. Although the information included in this report has been obtained from sources Paragon believes to be reliable, we do not guarantee its accuracy. All opinions and estimates included in this report constitute the judgment as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. Past performance is not a guarantee of future results.