Times are changing in the Washington, DC area real estate market. A year ago, sellers would quickly get multiple offers for their properties. Escalation clauses were the norm and agents were doing minimal work to sell properties. All you had to do was stick a sign in the front yard and the property was sold by the end of the first open house! But now, all that is changing. The supply of houses on the market has increased drastically compared to this time last year.
Even though I believe there are just as many buyers currently looking there is more to choose from, making this a “buyers market." A buyers market occurs when there is a wealth of properties on the market, giving buyers negotiating power – for a buyer the ultimate leverage lies in having many choices. For example, I recently put in an offer for one of my clients on a studio condo in Glover Park, North West. The location was perfect for my client’s needs - it was facing the main entrance of Glover Archibald Park and had been on the market for over 30 days. When we put in the offer it was substantially lower than the asking price. This was because of the many condos on the market in the area and the fact that this particular property had been on the market for quite a while – this gave the buyer quite a bit of leverage and lead to them getting a great deal.
Due to this buyers market, sellers and listing agents have to adjust. Just last year most offers to buy a property in the area came with an escalation clause. An escalation clause is used when multiple offers are submitted for one property. There are two parts to an escalation clause – the cap, and the escalating factor. The cap is the ceiling or top price the buyer is willing to pay. The escalating factor informs the seller how much the buyer would be willing to pay above the other highest offer without going over the cap. But nowadays with the lack of multiple offers out there, there is no use for this clause.
With a good real estate agent buyers are able to negotiate the asking price down in most cases! I feel that this changing real estate market really highlights the importance of having a good real estate agent, willing to work hard for you. A listing agent can no longer conduct an open house for you on Saturday and have multiple offers by the following Monday. Now a listing agent will need to come to the table with creative ideas to attract buyers and have the ability to market and differentiate your house from the others on the market. On the other hand, your realtor should be a skilled negotiator, able to take advantage of the buyers’ market to get you the best possible price.
About Vuth Chao:
Vuth Chao specializes in helping buyers find the right home for them. His site, http://www.WashingtonDCRealEstateBlog.net, offers insights, news, and update on the Washington D.C. real estate market. For more information about Vuth Chao, please visit http://www.washingtondcrealestateblog.net. ###
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