Our goal is to make sure that we keep you educated by applying national news to our local market.
Recently, Realtor.com published an article titled “REALTORS® Indicate Bidding Wars Haven’t Ended”. It shares a lot of good information, and goes on to say the following:
“Home buyers shouldn’t assume bidding wars are a thing of the past. In August, there was an average of three offers for every home sold, according to the 2019 REALTORS® Confidence Index Survey. That figure has stayed mostly consistent since October 2015, when the National Association of REALTORS® started tracking such data…”
While a mostly true statistic (it’s technically 2.3), it’s important to understand the dynamics of that measurement. If I have $0 and you have $1,000,000, then on average we each have $500,000. The problem is that I don’t actually have that much; one of us has A LOT, and the other has nothing.
This logic is true for sales in our local real estate market. While it may be true that there were 3 offers for every home sold, that number looks very different when broken across different price ranges and neighborhoods. A more accurate situation might be “homes priced below $250,000 in great condition are receiving 5 or more offers in a weekend, while homes priced above $750,000 are receiving one offer per month”. Though these are hypothetical numbers, the point is that lower priced homes are usually receiving more bids than higher priced homes.
A second variable is that the 3 offers might be spread out. Home sellers sometimes receive one or more “low ball” offers before receiving an acceptable offer weeks later. Multiple offers, but not a bidding war.
A third variable is for homes that are overpriced. Sometimes a seller wants to test the market at a higher price and receives offers that are lower than ideal. Time goes by, price adjustments are made, and new offers come in that are accepted. Multiple offers, but not a bidding war.
Lastly, the stat is “for every home sold“. In Northville and Novi last month, there were 475 homes for sale and 121 that sold. To keep things simple and not account for escrow time, we’ll say that’s 354 homes that didn’t sell. If those 121 sales each received 3 offers, that’s 363 offers. That means there were 0.76 offers for every home for sale. The REALTOR® stat is true, but so is this one. Both imply a different message depending on how they’re presented. Just an example of how you can pick certain stats to create a message.
This is all important to remember when you’re buying or selling, because it dictates your strategy. 3 offers per home and a bidding war sound great until you have an analysis done that shows homes in your neighborhood take an average of 30 days to sell and usually receive 97% of their asking price (unless you hire a team with a marketing proposal that helps you beat those odds 😉 ).
Stay educated and speak with your real estate advisor to keep up with the trends in your neighborhood. Have a great day!