Is the "Winners cURSE" EFFECTING YOU?

    This week's main topic specifically focuses on Winning the Bidding War in Real Estate. As the market continues to turn more favorable to buyers this year, we are seeing these bidding wars less and less, however, what we are seeing are the latter results from bidding wars which occurred from 2020 up until early 2023. In fact, I have ran into this so frequently, that it deserves to be discussed. So here we go. 
   
     Sometimes a Bidding War IS NOT A WIN for a Buyer. Even if it may feel like triumph in the moment. In many cases, winning a bidding war can truly hurt your bottom line. 
     Researchers recently reviewed more than 14 Million Home Sales across 30 States and found homes that sold above list price (the typical sign of a bidding war) often underperform in the long run.

Here’s what the numbers show: 
-  Buyers who paid over asking ended up earning 10.5% lower total returns compared to those who didn’t overbid. 
-  The data suggests an average overpayment of about 8% above fair market value.

-   When you factor in mortgage financing, those same buyers earned 6.9% lower annualized returns.

 -   And perhaps most concerning bidding war buyers were nearly 2% more likely to default on their mortgages later on. 

  In short, the study found that getting caught up in the “WIN” can lead to buyers stretching too far,  especially in competitive, fast-moving markets such as 2020-2022. 

   What This Means in Today’s Market

 Even though we're shifting into more of a buyer friendly environment we still see offers pop up on competitively priced, move-in ready homes, especially in desirable parts of the Triangle. But that doesn't mean every bidding war is worth winning...

     Here is the Takeaway for Local Buyers & Sellers: 

       Buyers: Don’t assume you have to “win” by overspending. A solid strategy, not emotion, should drive your offer.


     Sellers: Pricing your home right still creates urgency. Bidding wars are not completely off the table in this current market. When done correctly, a bidding war can work in your favor without setting up the next buyer for financial strain.


     Investors: Be cautious with comps based on above-list closings. They might reflect excitement, not real value.

   The Key Takeaway? Whether prices are rising or leveling off, data still wins over emotion. 

    Yes,  I have experienced bidding wars in Central NC even this year and as always am happy to discuss how to help you achieve your real estate goals this year anytime. Simply reply to this email or call 919-810-3832 anytime.