How Record Low Inventory is Affecting the Triangle Real Estate Market

    2020 may go down as one of the most memorable years ever even though I think most of us would love to forget it.  Here in the United States, we have been dealing with the Corona virus for about 6 months now.  When it first started, we had the grand idea that we may be able to get past it in a few short weeks or a couple months at the most.  Well that obviously hasn’t happened.  We first were sceptical that the real estate market here in the Triangle might have a negative ripple effect from the virus but it has not.  In fact, we are seeing homes continue to sell fast, sell for top dollar and sell with multiple bids on a lot of homes.  In fact, this past week we saw a record low number of homes Active on the market here in the Triangle area at just under 4900 homes.  These low numbers are causing some ripple effects when it comes to navigating the market and writing offers...

Higher Due Diligence Deposits

If you have bought a resale home in the Triangle area in the past 7-10 years, then you are familiar with the term, “Due Diligence”.  This is the time period negotiated on the contract for once you go under contract, you have your “Due Diligence” period to investigate the home.  For this time period, you pay a deposit.  Although there is no set standard amount for this, typically you would have historically seen it in the .5% - 1% range of the price of the home.  With the lower inventory in the area, we are seeing this amount double if not triple in some instances in order to try and set a buyer apart from potential other buyers.  I have heard of amounts as high as $10,000 for a $370,000 home.  What makes this so unique is that the Due Diligence deposit is non refundable to the buyer in the instance that something were to happen and the buyer had to walk or chose to walk away from the deal.

Multiple Offers at Higher Price Points

In my 8 years of real estate experience, I have dealt with many multiple offer situations.  You have to imagine that for the most part, your clients are not the only ones looking for a specific type of property and if they love it, there is probably someone else out there that loves it also.  That being said, the buyer pool is usually smaller as the prices go up.  Most of my multiple offer situations in the past have occurred under $350,000.  Today in this market, we are seeing multiple offers on a majority if not all homes under $350,000 and a lot of the homes up for sale up to $500,000.  Buyers need to be prepared to pay the asking price and in most multiple offer situations, more than asking price for a home…..if they want to actually own it!!

Backup Offers

The Backup offer has always been an option for sellers to keep their home marketed even after going under contract in order to possibly take advantage of having a backup offer.  When a seller has an acceptable back up offer in place, it puts them in a more advantageous position when it comes to future negotiations with the buyers they are currently under contract with.  It has not always been taken advantage of however.  A lot of sellers want to get their home under contract and stop the showings and inconvenience of having it on the market.  In the world we are in currently with Covid-19, many times we are seeing “life” happen and individuals that go under contract on a home either lose their job or are laid off temporarily which affects their ability to qualify for the mortgage and they have to walk away from the contract.  We are seeing this happen more and more lately so with it, sellers are more often than typical, looking at taking a backup offer to protect themselves.  Low inventory is also causing buyers to be willing to put in backup offers on homes they like in the event something happens and the home becomes available again.  Low inventory means less to choose from so when they find what they like, they don’t have the feeling of needing to see more because there may just not be “more” to see.

Inventory won’t stay at super low numbers forever and eventually we will get back closer to a more balanced market.  While we are in a severe “sellers” market, buyers have to be aware of the obstacles they are facing and they need to make sure they have a professional helping them on their journey.  Our team at the Kima Real Estate Group is here to help.  If you are looking to Buy, Sell or Invest in real estate in the Raleigh/Triangle area, give us a call today at 919-300-5421 or check out our website at Chad.WelcomeToCarolina.com for all your home search needs.

Chad Wingler Lead Buyer Specialist

chad@peterkima.com