Buyers’ Pressure Cooker Eases a Bit as Bidding Wars Drop

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By Kerry Smith – July 2019
A survey of Redfin agents found a slow but steady drop in the percentage of listings engaged in a bidding war. In April, 74.1% of sellers entertained multiple bids; in May it dropped to 72.1%; and in June, it fell to 65%. But Sarasota tops the list of U.S. bidding-war cities at 87%.
SEATTLE – While the U.S. remains in a strong sellers’ market, the buyer competition seems to be easing a bit as home prices continue to rise.

In June, two out of three (65%) home offers written by Redfin agents faced competition, but that’s down from a revised rate of 72.1% in May and a pandemic peak of 74.1% in April. Still, the percentage of bidding wars in June was higher year-to-year. In June 2020 – the housing market’s early rebound after the first wave of pandemic shutdowns – the agents reported a 56.8% bidding-war rate.

While the study didn’t outline the reasons for a drop in buyer competition, buyer fatigue is likely one factor. Some house hunters have moved to the sidelines after losing bidding war after bidding war. An improving supply situation may also be making a difference, with new listings up 4% year over year. With more properties to bid on, the competition for any one property may have dropped a bit.

“The first half of this year was red hot – it was almost impossible to get an offer accepted. But recently, we’ve started to see buyers get cold feet,” says Laura Sechrist Molenda, a Southern California Redfin agent. “Two of my buyers just had their offers accepted because the sellers’ first buyers backed out. The market is still competitive, but buyers are more trepidatious than they were at the start of 2021, and less willing to pull out every stop in order to win.”

Redfin agents report that more buyers are starting to keep contingencies – a sign that competition is beginning to abate.

Sarasota and Charleston have highest bidding-war rates

Of the 52 U.S. metropolitan areas in the analysis, Sarasota, Florida, had the highest bidding-war rate – 87% of offers in June. Next came Charleston, South Carolina (82.9%); Reno, Nevada (80%); Charlotte, North Carolina (78.9%); and Kansas City, Missouri (78.6%).

“It’s still really competitive when there’s a lower-priced home in a very-sought after area,” says Seattle agent Kristi Miller. “But bidding wars are starting to slow for mid- and higher-priced homes.”

Metros must have had at least 20 offers recorded by Redfin agents in both June 2021 and May 2021 to be included in the analysis.

Florida metro areas by percentage of bidding wars

    • Sarasota: 87.0% in June 2021; 70.0% in June 2020
    • Orlando: 66.2% in June 2021; 68.1% in June 2020
    • Jacksonville: 63.6% in June 2021; 52.9% in June 2020
    • Tampa: 56.3% in June 2021; 68.2% in June 2020
    • Miami: 49.4% in June 2021; 59.4% in June 2020

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3 Big Mistakes Buyers make:

  1. 1. NOT KNOWING THE NEIGHBORHOOD...ContinuedReal estate always has been and always will be a local business. Know your neighborhood is a cardinal rule in this business. A real estate professional knows what is going on in their local market area. Hire a knowledge, local professional. When we see folks wandering around with a notebook and a list of questions, we know they are the most likely to make a costly mistake. A PROFESSIONAL Realtor, (please note the word professional), can spend 15 minutes listening to your needs and wants, and probably rule out 90% of the local market options, and focus your attention, on the 3 or 4 or 5 communities that will meet your needs, and make sense from both a financial and lifestyle point of view. I am amazed at how many people from out of State, go it alone, end up buying in the wrong community, and come to regret it. I meet people like this everyday, and everyone single one of them will say to me: “I wish we had met you first.”
  2. 2. GETTING STUCK IN AN HOA NIGHTMARE...ContinuedHome owners association nightmares are the stuff of legend in our State. Do not buy the wrong property in the wrong community. A knowledgeable real estate professional can explain to you upfront, the ins and outs of the HOA regulations of the community you are considering, and help you avoid 99% of these potential pitfalls. This is another very costly mistake.
  3. 3. THINKING YOU DO NOT NEED A REALTOR WHEN BUYING A NEW HOME...ContinuedEverybody knows you need a Realtor to represent you, when buying a resale home. Many do not know, you also need a Realtor to represent you, when buying a new home. The new home sales person in the model home works for the Builder, not the Buyer. They are paid to look out for their employer’s interests, not yours. You will not save $1 by going it alone. You will lose money. A lot of money. One of our largest local builders reported 872 annual sales, of which, 762 were handled by Realtors representing the Buyer. That is 87% of the total. The Builder has already factored paying a finder’s fee into the price. The Builder will not rebate $1 of this money back to you. Builders laugh under their breath, when Buyers try this negotiating tactic, even though they will politely agree with you. Professional representation costs you $0, why would you fend for yourself, in a market you know almost nothing about? Buyers know less than 20% of what they actually need to know, to get a great deal. Having gone through the new home buying process hundreds of times with clients, we know all the pitfalls to avoid, and how to make the process go smoothly. Do not go it alone, get professional representation, it costs you $0. Not doing this is the most costly of the 3 mistakes. But everyone has heard the old saying, you can lead a horse to water. We are in the business of helping our customers solve a problem. Our ability to do that, is the sole reason we have a thriving business. We are here to help you through the entire process, and get a great deal.

4 Big Mistakes Investors make:
  1. INCOME... ContinuedThe rental income does not justify the $/sq. ft. purchase price.
  2. EXPENSES... Continued The monthly expenses are too high, relative to the property type and rental income produced.
  3. CAP RATE... Continued The capitalization rate is too low to justify the investment.
  4. HOA REGS... Continued The home owners association regulations are too restrictive, or do not permit the intended use. Frequently overlooked or glossed over by some sales people, the long run financial consequences are catastrophic if a mismatch occurs.
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