Real Estate Bidding Wars
For many years, the homebuying process was the same. The seller and their agent would do market reserach to determine the listing price. This price was generally the ceiling of the negotiation. The actual sales price would almost always be somewhat lower than the list price. It was unthinkable to pay more than what the seller was asking. Those days are in the past. Welcome to the new world of real estate bidding wars!
Today is different. How did bidding wars become the normal in today’s real estate transactions?
According to the Home Buyers and Sellers Generational Trends report just released by the National Association of Realtors (NAR), 45% of buyers paid full price or more. The record-low supply of homes for sale coupled with very strong buyer demand is leading to a rise in bidding wars. Homes today rarely sell for listing price or less and more often sell for more than the list price. In some cases, a lot more.
You may need to change the way you look at the asking price of a home.
In this market, you likely can’t shop for a home with the old-school mentality of refusing to pay full price or more for a house.
Because of the shortage of inventory of houses for sale, many homes are actually being offered in an auction-like atmosphere in which the highest bidder wins the home. In an actual auction, the seller of an item agrees to take the highest bid, and many sellers set a reserve price on the item they’re selling. A reserve price is the minimum amount a seller will accept as the winning bid.
When navigating a competitive housing market, think of the list price of the house as the reserve price at an auction. It’s the minimum the seller will accept in many cases. Today, the asking price is often becoming the floor of the negotiation rather than the ceiling. Therefore, if you really love a home, know that it may ultimately sell for more than the sellers are asking. So, as you’re navigating the homebuying process, make sure you know your budget, know what you can afford, and work with a trusted advisor who can help you make all the right moves as you buy a home.
Let’s connect so you have the best advice on how to make a competitive offer on a home in our local market.