Despite the media reports that Real Estate is a bad investment and that the last few years has strictly been a buyers’ market, with short sales and foreclosures building all over the country, homes in Short Hills NJ continue to sell with multiple offers and over the list price. This is not the case for every home, but based on value pricing and supply and demand, we are still seeing bidding wars during the 4th quarter of 2010.
Why you ask? There are several reasons.
This has been a phenomenon that has always baffled the pundits. When a town (like Millburn Township, which includes Short Hills as the largest part of the community) has top-rated schools, a train line that goes directly into Manhattan, excellent shopping (The Mall at Short Hills is nationally recognized), dining (over 30 restaurants within a 5 mile radius), recreation and many luxurious homes, the entire community benefits and the housing market rebounds faster in a downturn.
No one is claiming that Short Hills NJ is immune to a downturn. Prices are down from 10% to 30% off of the highs in 2005 & 2006. Many people lost equity in the last few years just as the bond market, stock market and job markets all struggled along in the wake of Bear Stearns and Lehman Brothers demise. What’s interesting is that in every town along the Midtown Direct Train line (and even in towns one zip code away like Livingston and West Orange, NJ), we still see multiple offers when a property appears to be a value and there is not much competition.
What most people don’t realize is that the buyer who makes the pre-emptive strike and bids well over list price, is one who may have been looking for several months (if not years) and they are just plain old TIRED of losing out. They understand the process, they know the comps and the reality is, if they lose this house, it could be many months before they find what they like again. Chances are they may just be right back in the same scenario; bidding against other people who want what they want.
Last month (mid November) in Short Hills, a large center hall colonial, on an acre of land, with a pool, on a quiet cul-de-sac, hit the market for $3,195,000. All redone with beautiful detail and moldings, new kitchen, baths, pool house & more. This property garnered 5 bids. You do the math: One winner, four others were disappointed. If a similar house were to come on the market, there are at least four other prospects who might submit a contract. If once again, if there are multiple offers, the buyers who lose out, could easily bow out and say “I’m done with this nonsense.” OR, they could become the buyer who says “I MUST HAVE THE NEXT HOUSE THAT HITS THE MARKET.”
Often this family has sold his current home or his lease is ending, he has kids that need to get into school or the wife is expecting a baby and there is a sense of urgency. These are factors that fuel the market, but often it is just the simple case of buyers running out of time and patience to continually lose out on the bids they submit.
Between Nov. 1, 2010 and Dec. 17, 2010 there have been 25 houses that closed in Millburn and Short Hills and ten of those sold OVER THE LIST PRICE with more than one offer. Several of those had been on and were reduced, but it goes to show that when a house is priced well, people flock to it and they recognize the value.
Buying a house requires a study of the market, the understanding of the comps, knowing your competition and evaluating the patterns of homes that sold and closed so you can create a meaningful strategy to be a winner, not a loser in a multiple bid scenario. For advice on how to submit a winning bid and for a list of all homes that have sold and closed in the town(s) your dreams, call us at Towne Realty Group today. 973-376-8300 or try my cell phone at 201-417-1600.