December 7, 2023 - Sejal Naik
In this hot market, making tradeoffs is becoming common for many REALTORS® are working with buyers who face very few choices on the market, extreme competition for homes, and stress and disappointment, sometimes through multiple unsuccessful offers. Home buyers are making compromises and offering concessions to compete in this tight market.
In this month’s Flash Survey, we asked our Virginia REALTORS® members to provide their insights on the obstacles buyers are facing and the compromises that are common in the market. Over March 25 through 28, 2021, we received responses from 1,083 Virginia REALTORS® members, including 1,053 who had worked with a buyer and/or seller in 2021.
Here are highlights from the March Flash Survey:
Finding a Home
- The fast-paced market and historically low inventory has forced buyers to re-evaluate their housing and neighborhood preferences, widen their search, and make tradeoffs on amenities. Nearly nine out of 10 Virginia REALTORS® members (87.7%) said that it is “very common” or “somewhat common” for home buyers to look outside of their preferred neighborhoods as they realize how few homes are available.
- Buyers in this market seem less likely to make tradeoffs on the size or style of the home they are looking for, but they are willing to consider homes that need major upgrades or updating.
- Only 34.2% of Virginia REALTORS® said that it was “very common” or “somewhat common” for buyers to settle for a townhome or condo instead of a single-family home.
- A little more than half (51.0%) said that it was “very common” or “somewhat common” for buyers to compromise on space or number of bedrooms.
- More than three quarters of Virginia REALTORS® (75.2%) said that buyers were willing to consider homes that need major upgrades or updating.
- As the inventory of existing homes shrinks, some buyers have turned their sights to new construction. About 56% of Virginia REALTORS® said that building a new home, rather than purchasing an existing home, had become “very common” or “somewhat common” among buyers.
- Finally, the tight market has discouraged many buyers. In fact, more than 70% of Virginia REALTORS® said that it is “very common” or “somewhat common” for buyers to decide to put off buying a home altogether in this market.
Making an Offer
- Nearly every REALTOR® responding to this survey said that buyers are making offers over list price or including an escalation clause in their offer. Nearly 90% said offers over list price were “very common” and another 8.5% said they were “somewhat common.”
- Buyers in this market are facing stiff competition, and almost all are offering some type of concession in an attempt to make a successful offer.
- About 87% of Virginia REALTORS® said it was “very common” or “somewhat common” for buyers to waive the home inspection. Some REALTORS® commented that buyers were having an inspection done for information purposes only, but not making the offer contingent on the home inspection results.
- Nearly 70% of Virginia REALTORS® said that waiving appraisals has become “very common” or “somewhat common.” Many REALTORS® note that buyers are including a provision that they will pay a certain amount over any appraised value. Other REALTORS® have pointed out that this trend in waiving appraisals has put VA buyers at a disadvantage because they cannot opt out of an appraisal.
- The following tradeoffs are also “very common” or “somewhat common” in today’s market: increasing the earnest money deposit (79.2%), waiving the home sale contingency (66.2%), and offering a shorter loan contingency timeline (68.6%).
- Other ways buyers are proceeding in this hot market (not specifically asked in the survey) are through cash offers and making offers sight unseen. Some buyers are also offering sellers free or significantly reduced rent back periods.
A note about surveys: This is not a randomized sample survey of Virginia REALTORS® members. However, the number of responses and the geographic coverage of respondents make it possible to draw conclusions about the population of Virginia REALTORS® working with buyers and sellers in 2021, with a certain level of confidence. These statistics from this survey have a margin of error of +/- 3.1%.
Responses to our surveys are confidential. We do not look at individual responses but rather report data in the aggregate.
Virginia REALTORS® reports on the economy and housing market in Virginia. New information is updated on the Virginia REALTORS® website. A new Flash Survey is sent out at the end of each month. For more information, please contact Virginia REALTORS® Chief Economist, Lisa Sturtevant (email@example.com).
*Information as of April 1, 2021