The Path Forward: Realtors, Buyers Wrestle Challenging Real Estate Landscape

Written by Posted On Friday, 26 June 2020 05:00

Bidding wars in the midst of pandemic? It doesn’t seem to make sense. Yet buyer demand is back with a fury all across the nation, and the tight inventory that dogged the market before the pandemic still lags behind demand, unleashing a season of almost unprecedented buyer competition. 

“Just this morning, one of our agents had 20 offers on a home in Hayward within 24 hours of listing,” said Sereno Group co-founder and CEO Chris Trapani in northern California. “And most of those offers were $100,000 to $200,000 over the list price.”

Hayward, he said, is in a mid-priced area on the edge of Silicon Valley, where an average sale price of $700,000 attracts a ready pool of buyers. 

“But 16 to 20 inflated offers are normal these days in almost any price range,” Trapani said. “With prices rising and interest rates low, real estate is the bright spot in the economy. Work-at-home consumers, families cramped for space, and millennials ready to stop writing rent checks are driving a rush to buy.”

 But if the rush is fueling a spike in prices that isn’t deterring buyers, the news of increased equity and multiple offers is slow in resonating with sellers.

‘Sellers have been sitting on the sidelines for months, some because of pandemic health concerns, others waiting to get a feel for where the market will go,” observed CEO Mark Stark, Berkshire Hathaway HomeServices Nevada Properties. “They need to understand this is nothing like the2008 downturn, when home prices tumbled. Growing demand is sparking a surge in bidding wars and it’s a great time to sell your home.”

Agents, he said, need to reach out, knock on doors, and canvass the area after every open house. They need to show sellers they can get top prices, and let them know they have buyers waiting for the chance to buy a home in the neighborhood.

Coach Realty, serving Long Island, N.Y., is launching just such an effort. 

“List prices here are three to nine percent higher than a year ago at this time, and buyer activity is up 18 to 26 percent” said Coach’s operating officer, LP Finn. “But although we show homes within strict safety protocols, some sellers are still reluctant.”

So, he said, the firm has just unveiled a Ready For Recovery campaign, a microsite providing specially curated market data for agents to use in communicating with buyers and sellers. 

“The point is, we have real news to share,” Finn said, “and it’s news consumers need now.”  

Sellers who are coming back into the market are more demanding than they were pre-pandemic, said Finn. “They insist potential buyers are not only serious but pre-approved for a loan. By the same token, buyers are accepting that they need to be really strong buyers, in many cases offering more than the list price or putting down more earnest money.”

That’s because, he said, they know going in that they will have competition, and that once they find a property they like, it’s wise to make an offer right away.

“In California, as in many states, just getting to see a home can take persistence,” said Trapani. “There are still virus concerns, and given the sanitary protocols in place, showings are by appointment only. You need to have a relationship with a broker you trust to be among the first to view a new listing.”

It's time-consuming for agents, Trapani noted, because they are showing homes one after another, often for hours at a time. But as prices continue to defy the economy, it’s a part of the new normal.

“We are working harder than ever,” agreed Nelson Zide, senior executive vice president, Era Key Realty, Framington, Mass. “People are ready to move for a variety of reasons, and they are depending on us to help keep them competitive in this era of multiple offers.” 

Like his colleagues, Zide daily fields offers substantially above the list price. That, he observed, is driving velocity everywhere.

“In Utah, business is substantially up in June compared to the same period last year,” said Chris Jensen, president, Coldwell Banker Residential Brokerage in Salt Lake City. “Sellers receive quick offers and get their desired sales price, and with interest rates this low, buyers get more house for their money.”

 Home builders are working hard to keep up with the demand for new construction, Jenson noted.

In fact, single-family construction permits nationwide posted an 11.9 percent gain in May, while total housing starts increased 4.3 percent, according to a report from the U.S. Housing and Urban Development and Commerce Department - a sign that the rush for housing will continue.

The challenge for agents facilitating that rush is having enough homes to sell. 

“It isn’t that listings have gone away,” observed Stark. “It’s that homes are being snapped up before they ever hit the MLS.”

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Barbara Pronin

Barbara Pronin is an award-winning writer based in Orange County, Calif. A former news editor with more than 30 years of experience in journalism and corporate communications, she has specialized in real estate topics for over a decade. She is also the author of three mystery novels and two non-fiction books.

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