Triangle Real Estate Auction

Have you ever walked into a dark room that you are not familiar with and had to search for the light switch?  Did you like that “blind” feeling?  Most people experiencing this would have a feeling of lack of control and most folks are not comfortable with that feeling.  We all like to have a little bit of control or at least a little bit of knowledge of what is ahead or what to expect in order to curb our nerves.  The Raleigh/Triangle real estate market right now is like a dark room or even better, like a blind auction.

Recently I have been working with several clients and like most buyers in this market, they are running into multiple offer situations on every home they like and want to put an offer in on.  Typically we are seeing homes hit the market on a Thursday or Friday and by Saturday, the listing agent has put out a “Best and Final” offer deadline for some appointed time on Sunday.  This is causing what I am calling the “Auction” effect.  

The market still requires that homes be somewhat priced appropriately (double checked by the buyer’s agent before submitting an offer) however, the asking price has become more like a starting bid in an auction.  The main difference in this auction is that you only get one shot at a bid and you don’t have any idea what the other bids are so you better make it good.

There are 2  main parts to the bid/offer that we are seeing count the most recently. Offer price still carries the greatest weight as in most offers.  This number most affects the seller's net proceeds which determines how much money they can expect to walk away with at closing.  What has changed in the offer and has become a very important part of “bid” is the amount of due diligence deposit that is being offered.  (reminder, the due diligence deposit in NC is a non refundable deposit paid directly to the seller after the contract is negotiated and executed).  In a more normal market, the DD$ offered would be anywhere from .5% - 1% of the contract price.  Now with the “Auction” effect occurring, we have seen that percentage grow more toward the 2%-3% range and in some cases even higher.  That money is cash in the pocket of the seller upfront which speaks volumes in negotiations. 

With this auction mentality we are experiencing, the property appraisal is a big concern and definitely something to be kept in mind if you are a buyer going after a home and potentially offering well above the market value in order to win the contract.  I can’t speak for all sellers, but I would imagine they are looking for buyers that not only are willing to offer a nice amount for their home but also able to make up any difference in possible appraisal shortages that may occur due to the very competitive nature of the real estate market.  

It is not an easy market to navigate right now and based on inventory  levels here in the Triangle MLS, we don’t anticipate this crazy market changing anytime soon.  If you are considering buying a home in the near future (6-12 months), you need a professional to help guide you.  Give our team a call today and let us discuss with you what your options are, answer any questions you may have and put you on the path to success. 

Chad Wingler

919-300-5421

Chad@PeterKima.com