According to a recent report submitted from real estate experts at Redfin, American homebuyers are more prone to settle when it comes to what they’re willing to accept amid high-stake summer bidding wars. With the housing industry’s supply and demand gap ever-widening, the housing shortage is soaring along with the season’s temperatures.
Due to this shortage of housing to choose from, coupled with record-low interest available for home mortgage loans (falling below 3% for the first time in history), bidding wars across America are really heating up. With such fierce competition overwhelming the market, Redfin reports that potential buyers are more willing than ever to make concessions that they otherwise would never have considered just to seal the deal.
Among these contingencies, according to Redfin, is the waiving of standard inspections. Specifically, Redfin agents reported that during the month of June, 19.9% of the accepted offers they submitted on American properties waived the inspection contingency. This statistic shows a marked uptick in number from last year’s June inspections waived (13.2%). As for winning offers, these posted 20.6% of appraisal contingencies waived during bidding wars this past month (June) versus last year’s June posting of 17.4%.
While waiving these contingencies may seem foolhardy or an extreme measure to some, Redfin’s number regarding how much fierce competition exists in today’s market bidding wars suggests that such measures may be necessary to win in the end. Specifically, Redfin real estate agents revealed that in recent months, competition has really heated up, with well over half (53.7%) of their clients’ offers embroiled in intense battles over who gets to come home with the keys to their castle when all is said and done. This statistic is up more than 2% from May’s 51.8% and up more than 9% from April’s 44.4%.
Redfin agent Lindsay Katz shared her experience with this phenomenon in Los Angeles: ”I put a house on the market the other day and within about 24 hours I already had 42 showings booked.” Katz continued: "The [winning offer] wasn't even the highest bid. We could've gotten another $30,000 for the house, but we opted to take the safe bet over the highest offer because there was so much uncertainty due to the pandemic."
New York Redfin agent Ken Wile mirrored Katz’s sentiments: "The market was totally dead during the first two weeks of March, but since mid-April, the phone has been ringing off the hook," Wile said. "Now everyone is prepared for a bidding war."