Why Everyone Should Read This
As I type this paragraph, buyers of residential real estate all over the Country are scratching their heads trying to strategize on how to win a bidding war on a house. I am a REALTOR® in the Raleigh, NC area. Raleigh is now the 3rd most competitive market in the USA to buy a house.
COVID certainly didn't do the housing market any favors at the beginning of 2020, but something happened a few months after COVID struck and kept us all at home. People all of a sudden wanted to buy a house. Builders previously forecasted 2020 to be a slow year so building supply speculations were at a minimum, then COVID kept a lot of workers in the factories that make building supplies at home and out of work. It would take months to get windows put in a newly framed house. All of this built up DEMAND. All of this lowered SUPPLY. This created a huge inventory problem in not only North Carolina, but all across the Country. Currently inventory sits around 1-2 months supply. 6 months is healthy. There are more REALTORS® than houses 'for sale' in our Country right now. It is a problem, but things can change overnight.
A Little Background
Around 2010 or so the market was almost the exact opposite of what we are seeing now. I am an independent agent, not with a big Firm, but definitely a seasoned, experienced agent. When we were going through a recession I had on average 13 listings. But, it didn't matter because nothing would sell. Home owners would complain about their agents not doing enough to "market" their home. You would see expired listings and new for sale signs in the same yard over and over thinking a new agent would magically change the market we were experiencing. Now, the majority of agents have that many or more "buyers", but no houses to show them. My... how times have changed. Again, this current market can change overnight.
Here's What Agents Are Seeing
If you were thinking of selling in a couple of years...for example, your kids will be in college and you were planning on moving to the coast...SELL NOW and rent somewhere for a couple of years! This market will not be like this forever and who's to say in two years your home will be worth what it is now. We have no way of knowing, but I very seriously doubt it will be a seller's market like it is currently in a few years.
Most agents are both buyers' agents and listing agents. Listing agents have an easier job than they did 10 years ago.
A day in the life of a buyers' agent goes like this. A home will come on the market on a Wednesday. The listing agent will say showings start Thursday. If you do not make an appointment immediately the slots will fill up and you will not even get a chance to show the house. We are generally allowed 15 minutes to show a house and if you overlap or take any time from a different agent's spot you are fined. This is partly because of COVID guidelines, but also because there are so many buyers wanting to see a house. A year ago we would have an hour slot vs. the 15 minutes slot we are seeing.
We will show a house and then an announcement will come from the showing service that the seller will make a decision on Sunday evening as they have multiple offers. Please have your highest and best offer in by 5pm. Now, some sellers may say I don't want to keep showing the house..."we received so many offers I want to accept "this" one." Well, the agent must abide by the sellers' wishes...so in some cases, even though there is a deadline, you may not even get a chance to write an offer.
*I showed a house last week that had 46 offers in 2 days. My buyers made an offer, but didn't get it.
A year ago making a full price offer was a great offer and would likely get the house. Then if you heard there were multiple offers you may offer a thousand dollars more. Now..............we are seeing listings get:
*very high due diligence fees...$5K, $10K, sometimes $20K. It used to be $2K was very high.
*over list price offers....$10K, $20K, $30k over list.
*very short due diligence periods....3 days, 10 days. 21 days was the typical dd period.
*sellers are getting lease back periods
When Will This End?
Again, things can change over night. My personal opinion is that with the vaccines rolling out sellers will feel more comfortable with putting their homes on the market lessening the inventory shortage. This time of year (April) is typically when we see more inventory. Builders will be catching up and mortgage rates will likely "slowly" rise.
All of these things may bring back a sense of normalcy to the market. A HUGE misconception is that all agents are just raking in the money because the market is moving so fast. This. could not. be. further. from. the. truth. The truth is most agents are losing out on offers and their buyers are taking a break until things cool off.
If you are in the market to buy a house you really have to like and trust your agent and LISTEN to them. If they are telling you to offer a certain amount over list price there is a reason for it. If you are selling your home you really have to like and trust your agent and LISTEN to them. If they are telling you to wait until Sunday to make a decision, there is a reason for it!
There is so much more to what is going on now than I can put in writing here. If you are not currently working with an agent please give me a call whether you are buying or selling and I can help you make prudent decisions.