Sarah Munds thought she knew what it meant to buy a house in a seller’s market when she started house hunting in January.
Munds, a 23-year-old software designer, pared down her search to homes on the Bench selling for under $200,000. She favored fixer-uppers that she could renovate. She secured advance financing. She checked new listings constantly to ensure that she could visit and place offers on houses within 48 hours.
In December, she offered full asking price on the second day a Bench home was listed. But another buyer had offered at least $10,000 over the asking price.
So she tried again. And again. Seven more times, in fact.
“I’d find a house I liked and offer at or a little over the asking price,” she said. “Somebody would come in with an outrageous offer way over asking price, or they’d come in with all cash.”
Stories such as Munds’ have become commonplace across the Treasure Valley as buyers fight each other for scarce homes.
The bidding is fierce for homes priced up to around $350,000, because of record-low home inventories in both Ada and Canyon counties, said Katrina Wehr, 2017 president for Boise Regional Realtors. Wehr is also the managing broker for Keller WIlliams Realty Boise.
Buyers must be ready to move fast
Treasure Valley home values have steadily climbed since the Great Recession, and median prices have surpassed the peaks of the pre-recession housing bubble of the mid-2000s. A median-priced Ada County home now costs a quarter million dollars. In Canyon County, it costs $175,000.
Buyers must be pre-approved for loans and often must make offers above asking price on the day a home hits the market, Wehr said.
“It’s heavily tilted toward the seller,” she said. “Buyers need to have their ducks in a row. If not, there will be four other buyers bidding on the same house who are ready to perform.”
Mike Brown, owner of the 39-agent Mike Brown Group at Silvercreek Realty in Meridian, said escalation clauses — formal pledges to outbid competing offers — have become commonplace in bids.
In March in Ada County, homes on average sold for 98.8 percent of the asking price, according to the multiple listing service. In Canyon County, that average was 100 percent, Brown said.
“At the beginning of the year, it used to be one in a handful sold for over the asking price,” Brown said. “Now, it’s three in a handful.”
An offer before the for-sale sign goes up
Lauren Bicknell, 34, said she moved to Boise from the San Francisco Bay Area so she could afford to buy a home. Like Munds, Bicknell focused her search on the Bench, where homes sold in March for a median price of $188,000.
Bicknell rented for a year as she learned her way around Boise and watched listings. Unlike her parents, who moved to Boise at the same time and bought after their third bid on a house, Bicknell landed a home on her first offer.
But doing so required having a line on a new listing. She made her offer before the agent had time to post a “for sale” sign in the yard, and she offered higher than the asking price.
“If you like a house, you have to move on it immediately with barely any time to think and to be confident in your decision making,” Bicknell said.
Wehr said some buyers get caught up in the moment and make hasty bids they later regret, especially if they had previously lost out after offering on houses they had grown attached to.
“You can get caught up, just like when you’re at an auction,” Wehr said. “You get excited. You keep bidding, and then you have buyer’s remorse.”
The tight market favors cash buyers, many of whom sell homes in expensive markets and moved to Boise to retire, Brown said. With the inventory dwindling and out-of-state buyers stoking price gains, average earners in the Treasure Valley are at risk of being priced out of home ownership, he said.
“Where does that traditional Idaho buyer go, where the husband and wife both make $30,000 a year? Not in Ada County,” Brown said. “Try to find a house under $200,000. It’s very difficult.”
Munds’ winning offer for the house she bought near Orchard Street and Overland Road was $160,000, $10,000 more than the asking price.
“I was under impression if you throw money at people, you’ll get a house quickly,” she said. “I’m not someone who gets frustrated easily, but I could see how that emotional roller coaster would be exhausting, especially seven or eight houses in.”
Some sellers are getting greedy
Some sellers are pricing homes above their market values, Wehr said. While some are winning that gamble, buyers are staying away from most, she said.
“We’re starting to see some greed,” she said. “Buyers aren’t going to overpay for something if we don’t have the comps to support it. I’ve seen multiple low appraisals. If appraisers can’t justify it with data, they won’t approve it.”
Agents are counseling prospective buyers to write emotional letters explaining to sellers why they want houses. Often, a young couple may write about envisioning their future children playing in the living room or backyard. Others write about the improvements and care they intend to provide. Brown said one couple wrote about their desire to move into a house before their wedding.
Munds, who moved to Boise after graduating from the University of Idaho in Moscow, said she wrote letters with each of her bids, including her winning bid. The letters were sappy, she said. She portrayed herself as a young woman alone in a new city looking for a house to pour her energy into. The home reminded her of her grandparents, she wrote.
“I wrote some of the sappiest letters,” she said. “They almost made me nauseous.”
Some of the letters drew positive feedback from sellers, even though other buyers won the bidding.
“For some sellers, it’s such an emotional process, the letter gives them something to latch onto,” Munds said. “It’s not the kind of person that I am, but it worked.”
Zach Kyle: 208-377-6464, @ZachKyleNews