An Interesting Email Thread
And vital for today's buyers to understand.
These are actual emails that I received from fellow North Carolina Brokers-in-Charge.
Dates of exchange: Monday, 22 Feb. 2021 – Thursday, 25 Feb. 2021
Format slightly edited for readability. And to make it easier to read, I am going to reverse the order. So you can read top to bottom...
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Monday, 22 February 2021, 8:31 PM
RE: Multiple Offer Madness
2021 is a bit wild so far.
The top numbers I've seen this year so far are 60 offers on one property and the most I've seen over list price is $100,000.
What are you seeing out there? How are you managing?
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Monday, 22 February 2021, 8:37 PM
WOW!
I thought 37 offers and $56,000 over list was nuts for this area. When I schedule a hot property, I’m looking at the blackout on Showing time as a gauge of how hot it is showing and the potential of offers that will be submitted.
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Monday, 22 February 2021, 8:43 PM
Ah, thanks for the reply. Those numbers I quoted are for the Raleigh market. I just realized I don't have my main signature on this email to show that.
We do the same with showing time. The requirement for non-overlapping showings has been helpful in a way in that it forces the schedule to blackout the appointments already taken, and you can generally see how many showings the property is getting, just like you said.
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Monday, 22 February 2021, 11:58 PM
So here's the thing...we have to take some responsibility here for this madness. Oh sure, we want to get our clients the best price as selling agents, and as buyer's agents we want to ensure that our client gets the house, but what will happen when this crazy bubble burst, when interest rates go up, and people begin to realize that they are locked into a home that they bought in a state of panic. If home prices and appraisals are not in line with what someone has paid for their home, when and if they are upside down in their mortgage, who are they going to blame? You know who!!!
I stood in a home this past weekend that went on the market Saturday with the limit of 15 minutes to show it. The listing agent provided the wrong lock box information and it took us 10 minutes to straighten it out with Showing Time. The listing agent noted that all offers had to be in by 8 PM that night. My clients looked like two deer caught in headlights. They had literally 5 minutes to decide if they wanted to buy this home for which they would have to overpay, and knowing that it wouldn't appraise. I looked them in the eye and told them that they should relax and walk away. "There'll be other homes and more listings in a few days and weeks," I explained. There was time...the world was not going to end if they didn't make up their minds in just a few short minutes. I explained that there was always the possibility that a year or two down the road they might be upside down on the home value vs. the amount of the mortgage if things take a turn. It was like I released the two of them from the middle of a whirlwind. They let out audible sighs and thanked me. Later we sat down and discussed options. I told them the pros and cons of making an offer that is considerably higher and how this artificial inflation is actually not in anyone's best interest. Even the sellers could get burned. I am seeing that there are more deals that are getting canceled during due diligence. Sellers might lose the homes they are wanting to move into because of cancellations. The whole thing is insane. It's up to us, the professionals to rope our clients in a bit...to calm them down so they aren't in some half-crazed buying frenzy. Yes, they might miss out on a few homes, but it will give them time to consider their options, to make informed decisions and oh, by the way, if enough of us keep trying to control this situation, it will restore sanity for all of us.
Am I dreaming here? Or can we take back some of the control? No one is enjoying this. Sellers feel like their agents aren't doing anything to sell their homes and therefore they question why they should pay so much commission? Buyers are angry because they have to pay so much and they keep losing out on homes so they blame their agents out of frustration. The whole thing is ridiculous. We are all feeling helpless but really maybe not. Maybe we can change things by being the voice of reason.
Okay...I think I am through with my rant. I'd love to hear from others.
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Tuesday, 23 February 2021, 6:04 AM
Jessica,
You are spot on. In my opinion the whole process started with our Government printing trillions of dollars with no basis throwing it out on public, bottom line interest rates qualifying lower purchase point clients to jump into 100k more homes, people making short term gains in “no reason stock market gains”, builders increasing the prices crazy with the excuse of increased material cost are the big balloon that is going to burst soon.
People prove again they have short memory forgetting 2000 & 2008.
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Tuesday, 23 February 2021, 6:26 AM
Well said, Jessica. I have felt this way for some time. I have advised clients exactly the same.
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Tuesday, 23 February 2021, 6:33 AM
I'm in Mooresville. Same situation here. I'm very concerned about the overinflated offers and ridiculously high DD needed, just to ensure your offer stands out!
I'm also seeing an increase in BOM. Whether it's Appraisals, issues with the home, buyer remorse after making a hasty decision just to be competitive...I don't know. I also don't like the addendum agents are using stating 'if a property doesn't appraise, the buyer will make up the difference'! No!
I'm not comfortable with any of it.
My memory is not short! I do remember 2000 & 2008!
Ok, now my rant is over!!!
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Tuesday, 23 February 2021, 7:01 AM
Good conversation here. I agree that it has gotten stretched to a point of everyone being uncomfortable. And we are probably due for a pullback on prices and rising rates will help moderate some of the price growth. But the money printing and markets can stay irrational a lot longer than we think they should. And a lot of the growth we are seeing in the Triangle is relocations from large cities, the west coast and the NE. There are many hot markets in the US due to rates but a large part of our pressure is simply not enough inventory for the number of new buyers coming to our area. An appraiser friend of mine told me what I think is a record so far...home was listed at $990k in Durham and contract was for $250k over asking and $86k in DD money. We didn't get it.. as if I had to say that :)