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A for-sale sign is posted in front of a home for sale on February 23, 2015 in San Rafael, California.
How fast is fast? For Bay Area real estate, the speed of deal-making is accelerating this spring as homes spend less time on the market and cash deals close at bullet-train speed.
Just ask Steve Pierce, whose house in Redwood City attracted 17 offers last month and raced so quickly through the escrow process that he and his wife, Sheila, requested a delay so they could spend Easter dinner with the family: “It was like boom, boom, boom,” he said. “The buyers couldn’t wait to get in. All cash.”
Or ask Mei Zhang, who moved a year ago from Shanghai — another hot market — to the East Bay. In February, with all their loan pre-approval documents in order, she and her husband, Yudang, leapt on a house in Orinda, pushing it to contract in seven days. “We really liked it at first glance,” said Mei Zhang, “and so we made an offer really quick” — $41,000 over the $1,469,000 asking price.
A statistical spot check of Silicon Valley and the East Bay bears out the trend, with the typical two or three weeks on market often being whittled down to 10 days or less — in some cases considerably less.
Over the past six months, a typical single-family home in the Pierces’ Central Park neighborhood of Redwood City — and in the adjacent Woodside Plaza area — spent only 10 days on the market, down from 14 days during the same period a year before. Other real estate firm analyses of MLS listings show Palo Alto homes lately spending 10 days on the market, down from 16 a year earlier, and Oakland metro homes spending 12 days on the market, down from 13.
Looking at Silicon Valley, from Palo Alto south, it’s a particularly hot market fueled by the tech boom. Homes selling for $1.5 million and above spent an average of 17.3 days on the market in March 2015, compared with 23.1 days in March 2014, according to a survey by Coldwell Banker. But it’s not just high-end homes that are going fast.
“The competition is more severe this spring,” said Val Vandervort, the Pierces’ agent with Keller Williams. “When you’re writing an offer, you may think you’ve written a fabulous one and then get beat out by three other people. Buyers throw their hands in the air and say, ‘OK, I’ll do whatever it takes to get it.’ “
The speedy sales — veteran agents say they’re faster than they’ve ever seen, even during other hot market periods — are happening throughout the region, in part because demand has outstripped supply for so long. It’s true for most sales, regardless of financing as long as the loan paperwork is in order, but especially for the increasing number of all-cash offers.
“Things don’t sit very long,” said Melissa Bush, sales manager of Grubb Co., which specializes in high-end East Bay properties. “It’s fascinating to me to see the caliber of cash that’s out there.”
The market is “crazy quick — ridiculous stuff,” commented Redfin agent Davey Cetina, who works in Berkeley and Oakland. He described a March deal on a house in the Crocker Highlands neighborhood of Oakland: “We offered about 32 percent over, landed at $2.2 million and it was an all-cash transaction, seven-day close.”
Like RBIs or on-base percentages in baseball, “days on market” is a valuable statistic in real estate. A kind of barometer of the market’s pace, it measures the number of days between a home’s listing and a contract between seller and buyer on its sale price.
Agents say that in the current sellers’ market — with its limited inventory and excited bidding — it would be possible to move many properties to contract within two or three days of listing. This often happens with cash deals, which represented 26.6 percent of all Santa Clara County transactions in March, compared with 25.5 percent in San Mateo County, 20.7 percent in Contra Costa County and 20.5 percent in Alameda County, according to CoreLogic, the real estate information service.
Some sellers prefer to have “a bird in hand” — straight-up money in the bank — by accepting an immediate cash offer, said Wendy McPherson, who manages four Coldwell Banker offices on the Peninsula. With the bank eliminated from the equation, that swiftly moves the deal through escrow.
“Coming across my desk in the last 10 days, I’ve had 10 closings that were 10 days or less,” McPherson said. “In my 39 years in real estate, it’s never been this quick.”
But speed is not always the best route to a lucrative sale, she noted, and many agents recommend orchestrating “days on market” for a longer period in order to build buzz around a property. Typically, a house will be listed on a Tuesday or Wednesday, followed by a private tour for brokers and then a series of open houses during the next two weekends. With the excitement spreading, offers are accepted on the Tuesday after that — and by then it’s often a feeding frenzy with multiple buyers bidding up the price.
And, of course, not every house is attractive enough to sell either fast or high. There are homes — agents call them “outliers” — that sit and sit. Maybe a house is priced too high. Maybe it has an unwieldy layout. Maybe the adjacent houses are eyesores.
“Anything that goes beyond 15 or 20 days on market, it starts to get stale,” said Julie Ray, a Coldwell Banker agent in Redwood City. “Agents have ADD. They’re on to the next thing. It’s dead.”
But most buyers should prepare themselves for the more likely scenario, she said: the short turnaround.
“You take them out a couple of times and you send them to a couple of open houses so they get a feel for how much things are going for. And then they should have their bank statements and prequalification letters just on the ready so they can write an offer at any time. It’s a waste of time, really, if you’re not preapproved. Without all that documentation, unless there’s one offer, that seller is going to choose somebody else who’s ready to rock ‘n’ roll.”
Contact Richard Scheinin at 408-920-5069, read his stories at www.mercurynews.com/richard-scheinin and follow him at www.twitter.com/richardscheinin.
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