Competition among buyers continued to cool in May but remained fierce overall, according to ""Redfin's"":http://www.redfin.com/ Bidding War Report for the month.[IMAGE]
Redfin agents reported 69.5 percent of offers written in May faced competition, a decrease from 73.3 percent in April. Year-over-year, competition was mostly flat, rising 0.2 percentage points from 69.3 percent.
According to Redfin analyst Rachel Musiker, April's monthly inventory increase--the largest since March 2010--was ""the reason for the easin'"" in bidding wars.
California markets are still the most competitive, with Redfin's San Francisco, Los Angeles, and Orange County homebuyers dealing with competition on more than 80 percent of offers made. However, even the Golden State is cooling off: San Diego and Orange County each posted double-digit monthly percentage drops in the number of offers facing bidding wars.
Still, Musiker noted some buyers have had to go to extreme lengths to put their offer above everyone else. According to reports from Redfin agents about the country, some buyers have been willing to vastly expand their price cap, offering as much as $100,000 more than the asking price (only to lose to bidders who went even higher).
As far as winning offers go: 49 percent of Redfin's winning offers were higher than the asking price (a drop from 51.9 percent in April), and 5.5 percent were all-cash bids (up from 5.1 percent). The four most common components of a winning offer were a conventional loan (68.3 percent), a personal cover letter (29.4 percent), a waived inspection contingency (11.0 percent), and a waived financing contingency (8.9 percent).
Finally, the prevalence of government-backed loans dropped from April to May. Loans insured by the Federal Housing Administration (FHA) made up 8.5 percent of winning offers, while those insured by the Department of Veterans Affairs (VA) made up 6.6 percent of winning offers.