New Jersey residents Joe Klock and his wife sat at a computer for a virtual tour of a home in Greenville. The windows did not open and close properly. But, knowing how competitive the current real estate market is, they made an offer that was never seen. Their bid was 5% above the asking price.
They have been overcome.
It might be the best. Klock said he was concerned about a possible smell in the house, which had cats.
“I saw air fresheners in every room and it made us think, but we weren’t there to smell it,” he said. “We had to rely on our daughter in Greenville, who did the tour for us.”
The combination of a heated housing market and the social distance related to the pandemic led to a sudden increase in buyers who were doing what was previously unthinkable: making an offer for a home – perhaps the biggest purchase of a lifetime – without ever entering the front door . For the four-week period that ended on March 14, 39 percent of the homes were sold above the list price, according to a report by real estate broker Redfin.
Mike Roach of Top Guns Realty said one of his clients made an offer never seen this week. They plan to come to Greenville in a few days to see it in person. Last year, he sold two houses and two plots without personal exposure.
“Buyers don’t want to miss the opportunity,” he said. “Before the pandemic, we didn’t have things like that.”
Nick Littlefield with Stone’s Edge Team has a client in Michigan in the process of buying a home after a virtual tour. Even those nearby are participating in the trend, making offers before sellers even start showing the house. That means they are making a non-refundable deposit just for the chance to inspect the home, he said.
“They are trying to beat everyone and make an offer as soon as they see ‘soon’ status,” explained Littlefield.
Littlefield said he does not recommend the strategy unless there is no other choice.
“I completely understand, but as an agent who sees things go wrong, I cannot advise that,” he said.
Some buyers turned to Redfin, an online real estate company. The technology-based brokerage, based in Seattle, allowed virtual tours before they became commonplace. It employs agents, who are salaried, to offer physical tours as well. As a company built to thrive during a pandemic, its stock price rose by more than 400% between March 2020 and February 2021. Its annual revenue increased 14% year on year to $ 886.1 million in 2020.
Redfin attracted users like Klocks because it charges a listing rate below the 1.5% average for sellers. If the seller also buys a house on Redfin within a year, the fee is further reduced to 1 percent. And in some areas, Redfin reimburses part of the commission paid by buyers. The number of homes sold at Redfin in Greenville increased by 40 percent in January 2021 compared to the previous January.
Jeff Young, a Redfin agent in Greenville, said last year’s real estate market was the wildest in history. The stock of houses fell in the interior of the state at the same time that many buyers from outside the state were looking for houses to take advantage of the low mortgage rates. For two to three months last year, Young said that up to 75 percent of his customers came from outside the state.
“The market was very crazy at the end of 2019 and then things went down when COVID first appeared and, after a few months, exploded,” he said.
He was surprised to see that most of the people he worked with last year suddenly agreed to place offers based on virtual tours. Many ask for a video tour and, if they like it, will fly for a personal tour – if it is not too late.
Klock said he prefers to see the houses in person, but it is difficult to do that in New Jersey. If they can’t get down fast enough, he has to rely on his daughter and his agent Redfin.
“There aren’t many houses on the market and those that are, if they are reasonably priced, sell in hours,” said Klock.
Follow Natalie Walters on Twitter at @NatalieReporter.