Multiple contract offers again are part of the Washington real estate scene, even if these bidding wars are not driving prices sky-high, experts said.
Brandon Green, founder of Brandon Green Cos., an affiliate of Keller Williams Capital Properties in Washington, said he recently had 37 offers on one listing, a District property that needed a complete renovation.
While that is an extreme, Green said it is not uncommon these days to see as many as five offers on one listing, particularly for properties that need work.
"People are bidding on properties they already think are a good deal," he said. "Investors are mainly cash buyers, whereas regular homebuyers are mainly using the FHA 203(k) loan."
That FHA loan provides money to both buy a property and renovate it.
Surprisingly, most of the "hot" properties are not foreclosures, he added, as the number of foreclosures has decreased because of the moratorium created by the paperwork scandal last fall.
"There is actually a shortage of foreclosures on the market," he said, "and that could be contributing to the frenzy in the bidding right now."
Green finds most multiple offers are in the District but Barbara Lewis of the Lewis Team at Long & Foster in McLean said there also is activity in Bethesda, Arlington, McLean and Alexandria.
"During the last several years, many people have chosen to rent rather than buy," she said. "Now with interest rates so low and the real estate market rebounding in our area, buyers are coming out looking to buy the best home they can find."
The multiple offers that are out there, however, are not inflating prices the way they did at the height of the real estate boom.
"Offers are coming in commensurate with recent comparables, and we are no longer having problems with appraisals," Lewis said. "Prices have adjusted, and the low prices and the attractive interest rates are motivating people to buy."
Green said multiple offers typically push prices up about 3 percent to 5 percent, unless a property is severely underpriced.
"The market is really savvy now as to what the price should be," he said.
Appraisal regulations have become more stringent and lenders are refusing to finance for more than a property is worth. This keeps the lid on bidding wars as buyers would have to put up more of their own money, in terms of a larger down payment, to cover the extra price increase.
Green said buyers really are just negotiating on price, however, and not as much on other contract issues, such as closing costs, closing dates or whether to have a home inspection.
The market should continue this way for some time, he said. "There is still a lot of uncertainty, and I think we'll continue to hobble along for a while except in a few hot spots."
