I was in a conversation with a colleague of mine the other day that has been in the mortgage business for almost 25 years and she said to me, “Ryan, I’ve seen some hot markets but I’ve never seen anything like this.”

That’s what I’ve been telling people too.  I can honestly say that this is the craziest 2-3 month period I’ve seen in the Austin housing market since I’ve been licensed as a Realtor.

Looking back and measuring forward, I suppose it really started about September of last year.  In the more median price ranges, I started to see multiple offers become the norm rather than the exception and houses selling above the asking price was not uncommon.  At that time, I figured it simply had to do with supply and demand in the more affordable areas being a little out of whack for the time of year.  I was not prepared for what has transpired over the past couple months and I don’t think that anyone could have predicted it.

I mentioned in my last Real Estate Newsletter that the Austin housing market has seen 19 straight months of year over year sales volume increases.  Sales rose close to 19 percent overall in 2012 and the median price was up about 6 percent as well.  But the most telling number was and continues to be the lack of available housing inventory to satisfy what appears to be an intense and on going demand from a formidable buyer pool.

Because real estate prices rely upon historical data, meaning today’s closings were listed a minimum of 1-2 months ago and priced using data that was derived from sales in the previous 3-6 months, its always very difficult to project at what point things are going to boom (or bust for that matter).

I’ve been working with a handful of buyers looking in the “inner loop neighborhoods” of Austin.  My clients’ house hunting efforts which started at a more leisurely pace just after the New Year have been throttled up to warp speed.  We’ve watched a number of attractive homes sell from “coming soon” signs in the front yard and others that actually make it to the market have multiple offers by sundown on the first day of listing.  That is not an exaggeration.  It’s equal parts frustrating, maddening and intriguing.

I’m also seeing sellers start to list ahead of the “now” pricing curve in anticipation of the next round of closings in the area bumping up appraisal prices.  I’m really interested to see where some of these houses that I thought were “overpriced” at the time ultimately end up selling at.

On more than one occasion, I’ve had to rationalize with a buyer-client of mine as to why it’s not a prudent decision to overbid (to win in multiple offer situations) on a house that is already 15K over the recent comparable sale prices.  Bottom line is that said clients could and probably would find themselves in a situation 2-3 weeks down the line where they’ve spent money on property inspections, paid for a loan appraisal (out of pocket) and been left with a value that is still $10,000 light.  Guess who’s going to make up that difference?  Chances are, not the seller unless they are hard pressed to get out of the house quickly.

In talking with mortgage lenders, these unsubstantiated contract prices are happening a lot right now.  Until the market sees a couple rounds of new closings at the higher competitive prices, it’s going to continue to be an issue.  And that’s why I feel strongly that buyers right now need to seek counsel from both an informed buyer’s agent and a more than competent lender so that they make the best decision with a long term perspective.  We do not want to see what happened in 2006-2007 transpire all over again.

Yet with every story, there is always the other side.  For home sellers right now, it’s an intriguing opportunity to tap into an overzealous buyer pool.  Selling is not rocket science, particularly in a market as enticing as this one.  However, like anything else worth doing, its worth doing the right way.  Here is a glimpse into our proven home marketing systems that help owners sell their homes more strategically and profitably.