In the frenetic world of Washington real estate, some home sellers at the moment are not only getting their asking price, but finding that buyers are eager to pay thousands of dollars more.
A shortage of available housing to meet the growing demand of home buyers trying to capture the lowest mortgage interest rates in seven years has in many cases turned the Washington real estate market into a sellers' domain.
Home buyers have paid anywhere from a few hundred dollars over an owner's asking price up to $5,000. In Potomac, one buyer recently paid $25,000 over the asking price for a house "he just had to have," a local real estate broker said.
Numerous area real estate brokers, however, voiced concern that the sellers' dream market is fast becoming a buyer's nightmare, with prospective homeowners pitted against each other as they bid for available housing. The problem is further complicated because many homeowners are deciding that refinancing their existing mortgages is more attractive than moving. With such homeowners staying put, it has created a shortage of resale homes, many in the industry claim, especially in desirable, close-to-downtown neighborhoods.
Most brokers contacted hesitated to discuss the current phenomenon of some buyers bidding up the asking prices of sellers.
"We don't want to push it because it isn't healthy," said Marcia Clopton of CBS Realty in Washington. "We don't want to publicize it."
She added that while she had recent cases of buyers who paid more than an owner's asking price, "I think it would be counterproductive for our industry to discuss them ."
Other realty agents said they were worried that their businesses would be adversely affected if the strong sellers' market persaudes homeowners to list and sell their own properties.
But some recent home sellers couldn't be happier.
When Dr. Robert McDowell put his red brick colonial house in North Arlington on the market about a month ago, he wondered whether he could get his $185,000 asking price. Originally, he thought the house was worth about $10,000 less, but decided to go along with his real estate broker's suggestion for the $185,000 figure.
During the first day the house was on the market, McDowell and his wife decided to go out and leave the selling to a broker. When they returned, three contracts from people offering to buy the house were waiting for them. Four other parties were waiting in the wings if those contracts fell through.
For the rest of the night, "it was almost comical," said McDowell, who just sat in his living room and watched the brokers representing the interested buyers battle over the sale.
"I let the three agents . . . go at it until 11:30 p.m.," he said.
In the end, McDowell accepted a bid that was $2,500 over his asking price. But in addition, a number of normally important conditions, such as a buyer's right to perform a home inspection before the contract becomes final, were dropped by the buyer.
McDowell, who said the settlement on the house is expected April 30, added that the contract also relieves him from having to make minor repairs, such as replacing a few cracked windows.
"What can you say but, 'It's great,' " McDowell said of his selling success. "We made substantially more money than we thought we would have."
Sarah Arnold, a Long & Foster broker who was McDowell's agent, described the current market as "madness and mayhem." She said that another one of her clients recently paid $5,000 more than the asking price for a house.
But Arnold, like most area agents, said one fear of the bidding war is that appraisers won't accept the selling prices on houses that were sold for thousands of dollars over an asking price. Such a denial by an appraiser could result in a home mortgage application being rejected by a lender.
"I think appraisers will be adjusting for the market," Arnold said she is hoping. Matthew Maury of Stuart & Maury Realtors added, "We're all holding our breath waiting for the appraisers."
Other brokers said prospective buyers who now own homes are also being hurt by the current market. "No seller today will tie up the sale of a house waiting for the prospective buyer to try to sell their house," said Helen King, a Shannon & Luchs Realtor.
For every satisfied home seller in today's market, such as McDowell, there is at least one buyer, or as many as 16 in a recent Bethesda house-bidding battle, who misses out either because an offer is too low or normal buying conditions are sought, such as a home inspection.
Like many Washington home owners, E. B. and Annelle Johnson of Alexandria said the recent low interest rates that have dipped below 10 percent "spurred us into action" to move from their two-bedroom condominium to a larger house. But once they began house hunting they found many others had the same idea.
The Johnsons have been frustrated losers in two recent Northern Virginia house-bidding cases, including McDowell's home sale a month ago, despite their $2,000 offer above his asking price.
"There was a sense of surprise when we lost the bidding," said E. B. Johnson, who added that their offer was beat by three other contracts. "We thought we'd get their attention by going over the asking price."
A week later, the Johnsons placed a contract on another house in Arlington on a Saturday that saw 60 prospective home buyers turn out for an unadvertised open house. That night they received a bid for their own condo, which was also on the market.
Many area home buyers have become frustrated with a market that is forcing them to decide quickly on a home purchase or risk losing out to others standing in line to buy the same house. Annelle Johnson said they had until the next morning to make their final offer on the third house.
"It's mind boggling. Making a decision on a substantial . . . investment is a lot to decide in several hours," she said. "I have definitely felt that any powers to negotiate were taken away by the market. You accept the terms or lose the house."
In the end, an Arlington seller accepted their bid, although it was a few thousand dollars below the asking price. "I don't know why the owner didn't wait for a better offer," she said. "He was out of town and he may not have been aware of the situation."
She said the only condition they were to able to negotiate was for a house inspection, which the couple had to conduct in three days instead of the standard seven to 10 days.
Her husband added that when they complained they were unable to inspect the roof because of a snowstorm, the seller's broker told them, "If you don't like the house, tough. I'll sell it to someone else." They were told six other buyers were ready to bid on the house.
E. B. Johnson, who said they were both delighted with their new house, noted that today's market demands that buyers must be ready to react quickly.
"It happens real fast," he said. "You just don't have time to develop an attachment to a house."