The real estate market nowadays is one with low inventory coupled with high buyer demand which provides the perfect recipe for competition and in the end higher sales prices. In more normal market conditions it is common for buyers to submit offers that are less than the asking prices and negotiate to arrive somewhere in between. However, things are much different today but the question is by just how much? Here are some helpful statistics to see.
The Current Real Estate Market Stats
Today’s real estate market is anything but normal with homes selling extremely quickly and they are receiving multiple offers due in large part to the low inventory and also a low rate incentive. Here are a few quick stats according to the National Association of Realtors (NAR).
- Homes are getting an average of 3.8 offers
- Homes are selling in an average of 17 days
The chief economist of CoreLogic explains it best by stating “The imbalance between robust demand and dismal availability of for-sale homes has led to continual bidding over asking prices, which reached record levels in recent months. Now, almost 6 in 10 homes listed are selling over the asking price.”
What An Asking Price Means Today
Traditionally the asking price for a property was what the seller set as the price to begin negotiations with buyers offering a number somewhere below it. However, in today's market conditions, the asking price is more of the price floor rather than the ceiling. If the property is truly a perfect fit for you then you will want to work with your agent to craft the best offer strategy as it may ultimately be sold for over asking.
Appraisals And Sales Price
With many offers today going above and beyond the asking price there have been appraisal discrepancies or “gaps” occurring very frequently. This basically means the agreed-upon contract price is far above what the home appraises for.
According to CoreLogic, “Beginning in January 2020, nationally, 7% of purchase transactions had a contract price above the appraisal, but by May 2021, the frequency had increased to 19% of purchase transactions.”
In the event that this happens, you will have to be ready to pay the difference to the seller as the lender will not loan you more money beyond the home’s appraised value. It is very important to have a firm budget and know what you are comfortable spending should this be the case.