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Is a New Real Estate Buying Frenzy Creating a Seller’s Market?

by Ken Corsini on October 11, 2012 · 5 comments

  
seller's real estate market

The Fed just released a report indicating the real estate market is experiencing widespread improvement.  For those who are actively buying properties right now, this should come as no surprise. With numerous investors and funds actively pursuing real estate investments, it’s not uncommon to see properties going into multiple offer situations  – many times resulting in properties selling over list price.

While this feeding frenzy of buyers can be frustrating to compete with, it does create an interesting dynamic on the sales side.  In places like Atlanta where the demand for property is very high and the inventory is shrinking every month, it’s becoming more and more of a seller’s market (at least in certain price points).

Case in point: We had a property on the market last week that went under contract to a retail buyer almost immediately. This was a modest rehab that had been priced towards the top of the neighborhood.  Within only a few days of being listed, we received an offer well above our asking price. Having priced the property fairly high, the over-asking-price offer came as a complete surprise. Interestingly, the agent explained to us that the buyer had been outbid on 3 previous offers and was ready to get something under contract.

It seems as though the competitive climate that has been building in the residential market is having quite an impact on retail buyers as well, not just investors.  As such, many agents are setting an expectation to their buyers that offers need to be strong in order to have a chance of getting accepted.  And with investors bidding properties above list in many cases, this is becoming more of a reality for buyers.

The bottom line is that for those investors that are able to obtain desirable properties at a good price, the potential for flipping is getting better and better.  Just last month I bid on a property and was beat out by another investor who paid $10,000 over list price.  Not a week later the exact same property was back on the market for $10,000 higher than what he paid! Talk about taking advantage of a hot buying market!

Every week I talk with other investors discouraged by the lack of inventory and increasing competition. Yes, it does make it harder to acquire inventory.  However, for those investors that are spending the time and energy to find and contract on the good deals, it does make the opportunity for a quick sale (and profit) that much easier.

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{ 5 comments… read them below or add one }

Larry Arth October 11, 2012 at 12:05 pm

Yes Many investors and now even wall street with R.E.I.T.S and hedge fund managers all competing to grab as much real estate as possible. Competition has definitely increased and inventory as you say is becoming very scarce. Additionally as the economy increases we have millions of people who have doubled up and living with friends and family members. As these people can afford to move out on their own the competition will continue to grow. Finally as financing opens up we are in for a nice healthy real estate recovery. This of course will not happen over night but will give us some nice solid gains. for some time to come.

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Sharon Vornholt October 11, 2012 at 12:18 pm

That’s very interesting Ken. I haven’t noticed that trend here yet, but I’m sure we will have the same situation eventually. It’s good to know for sure.

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Dale Osborn October 11, 2012 at 1:16 pm

The demand is definitely there – just need to keep the inventory levels up to keep things flowing smoothly. Can’t say it is a turn around overall, but certain pockets are definitely turning into hot markets to be in.

Dale

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Philip Wade October 14, 2012 at 11:29 pm

As the economy improves we have many individuals who have more than doubled up and living with friends, the seller’s market benefit this improvement.

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Karen Rittenhouse October 25, 2012 at 4:02 pm

We jumped into investing full-time in 2005. It was about that time that the real estate market began to tank…

It sure would be nice to see some steady appreciation for a change! Hope the trend you describe is real.

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