Bidding Wars And The Science of Buying in a Low Inventory Market

Posted by Cary W Porter on Wednesday, September 16th, 2020 at 10:11am

Understanding the Numbers When Buying in a Low Inventory Real Estate Market

As a homebuyer in today’s market, you’re no doubt at your wit’s end trying to find your dream home.

And when you find a home you love,  you’re competing with all cash offers and bidding wars driving the sales price above what it’s listed for, and many times, even above what the home is actually worth!

While there is nothing you can do to create more homes for sale, you can certainly arm yourself by understanding the trends and patterns in the areas you’re trying to buy in.

While it’s not quite rocket science, there is definitely a significant competitive advantage to those that understand the trends of a real estate market.

Sometimes, being competitive means not looking in the most competitive price ranges in the most competitive markets.

We looked at the data on thousands of offers agents for The Cascade Team wrote and received in the last two years to see how the strategies we track affected buyers’ odds of winning a bidding war:

Understanding the nature of the market, and preparing yourself for the journey (or battle) is probably the most critical step for managing your expectations. You can find Bidding War Strategies HERE

One tool that all Agents/Brokers of The Cascade Team Real Estate  have access to is the  “Market Snapshot” tool. This tool is also made available to the public on www.TheCascadeTeam.com website and is located HERE

In the last few weeks the market has overheated with sales and pending sales outpacing new inventory thereby driving already scarce inventory levels even lower.

With inventory sufficiently low we are deep in a Seller’s Market zone, so watch changes in the Market Action Index. As the market heats up, prices are likely to continue on a rather rapid upward climb.

The market appears to be placing an increasing premium on homes. When list prices and price per square foot consistently increase in tandem, as they’re doing now, you can often find short-term investment opportunities.

Watch the Market Action Index for persistent changes as a leading indicator for these trends to flatten or drop.

Inventory of Properties Listed for Sale

Inventory has been falling in recent weeks. Note that declining inventory alone does not signal a strengthening market. Look to the Market Snapshot Index and Days on Market trends to gauge whether buyer interest is changing with the available supply.

There are many other sources of housing statistics and trend reporting that your local real estate agent can provide you. Market Snapshot is just one of those tools.

If you’re in the market to buy a home in this crazy market, contact me anytime to discuss what resources are available to help you understand the competitive nature of your local real estate market.

Want to do a little research on your own Washington, Southern California, Portland, or Arizona City?  Below you can sign up to receive free, bi-weekly market report updates.

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