July 2020

“I want to buy my first home after walking through with a mask and gloves on for no more than my 15 minute time slot during which I can't touch anything and then compete against 30 other buyers so that I can bid way over asking, waive my home inspection and get beat out over and over before I finally come out the victor", said no one ever. When the market paused because of Covid-19 everyone speculated that real estate would be negatively impacted. The speculation was wrong. Sales may have slowed a bit in the short term, but low interest rates and record low inventory have created a shortage of properties for first time home buyers that is fueling intense competition for the few properties on the market in this price range. My opening sentence sounds like a nightmare, but it is the reality for many first-time buyers. Every time I have to call buyers and share the news that their offer wasn’t accepted, I feel their disappointment as the hopes and dreams they had wrapped up in that offer get added to the pile of discouragement that grows with each rejection. One of the most recent rejections got me thinking. My buyers bid $56,000 over asking and still were not the top offer. The list agent informed me that the winning bid was ‘significantly higher.’ I'm sad for my buyers, but I'm sad for the buyers with the winning bid as well. I won't know until the sale closes how much more the home sold for, but I’m guessing significantly could be $20,000 more. This means someone is paying roughly $75,000 over the asking price for a home that was priced at market value. If you listed that same home at the price of the winning bid, would it sell? Nope. It would be considered overpriced and it would sit on the market. Sometimes winning is losing. Coming out on top over 21 other offers to be stuck with a home you can't resell for what you paid isn't victory. The victors in this example won the battle but they also stripped any potential they had of building equity for the next several years. Multiple offer situations foster a mentality in people that they must win no matter what the cost. I counsel buyers not to put themselves in a situation where the desire to win overshadows the goal of finding the perfect place and making a smart investment. What is happening in the market right now is a brief snapshot in time and won’t last forever. A home purchase that stands the test of time, that is my definition of a true victory.