SEATTLE, May 10, 2021 /PRNewswire/ -- Buying a home is a stressful and challenging time and, in a supercharged market like today's, many buyers are getting burned out and may be resorting to dangerous strategies after losing multiple offers. Real estate agents throughout the past six months submitted nearly four offers per client on average before one was accepted, with 13% saying it took on average six or more1.
The good news is home shoppers are still finding homes to buy, despite intense competition, with the help of their real estate agents. A new survey of Zillow Premier Agent2 partners breaks down the strategies that are working in today's market to score a home – and what buyers should be prepared for.
Sweetening the offer
Agents are using a variety of tactics to help their clients' offers stand out. At least half of listing agents surveyed encountered an all cash offer, an escalation clause, submission before the offer review date, a higher down payment or more earnest money when reviewing offers.
Out of these strategies, one of the most effective to win a deal is an all-cash offer. About four in five agents (77%) sometimes submitted all-cash offers on behalf of their clients, and 41% of listing agents said an all-cash offer was the most effective strategy in their recent transactions.
However, cash offers are not feasible for most buyers in the market, and agents use an assortment of strategies to win offers. About 21% of buyers' agents offered a higher down payment or more earnest money to get their client's offer to stand out, and about one-quarter always submitted before the review date. More unconventional strategies that agents are using include offering leaseback, throwing a pizza party, and sending flowers to the sellers.
The role of real estate technology
With the market moving so fast, the best and easiest way to get a speed advantage is to get tech savvy. Agents say 31% of clients always or usually tour a home virtually before visiting in person.
"Being able to tour a home virtually is a big timesaver for buyers," says Josephine Sabatino, broker manager at RE/MAX Edge in New York City. "3D tours provide buyers a clear, detailed view of the home and they can decide if it's right for them. This saves buyers from going to see a bunch of homes that just don't work, and help narrow down their choices early."
Technology like Zillow 3D Home tours is an easy and cost-effective way to make a listing pop. In fact, according to Zillow user data,3 for sale home listings with a Zillow 3D Home tour got about 30% more views and saves than similar for sale homes without. Half of listing agents thought that 3D tours, virtual showings, and other technology helped their most recent transactions sell for more money.
Risky offer strategies
Waiving contingencies is common in an ultra-competitive market, and can be frustrating to home shoppers who lose bids to buyers using this strategy. In their last three to five transactions, at least half of the listing agents surveyed encountered waived inspections or financing. However, waiving contingencies can pose a huge risk to buyers in the short and long run.
- Waiving an inspection puts buyers at risk of unknown structural, mechanical or safety defects which can be incredibly costly to the buyer.
- If a buyer waives financing and their loan is not approved or the home doesn't appraise at the offer price, it's the buyer's responsibility to make up the difference in cash or walk away from their earnest money deposit – both potentially costly consequences.
- So-called "love letters," intended to tug on a seller's heartstrings, can put buyers and agents at risk of fair housing violations. These letters can include personal demographic information about the buyer, unlawfully swaying a seller's decision, which can violate the Fair Housing Act. This is also not a successful strategy for buyers -- according to the agents surveyed, love letters are the least important factor for sellers in the current market.
Agents are the key to winning the deal
The residential real estate market is not expected to slow down anytime soon, and that is why it's imperative for buyers to find a knowledgeable and trusted agent to guide them through the stressful and daunting process of purchasing a home.
Sabatino's overall advice for today's buyers? "Buyers need to remember the why and the priorities that have to come first. Don't worry about the set up that is already in the house. Bring in a friend with vision, and you could end up utilizing spaces for things you never thought possible!"
Data came from a survey of 376 Zillow Premier Agents who are part of a research panel. Fielded between March 26 and April 1, 2021, the survey asked respondents about the strategies they used or encountered in their last 3-5 transactions as sellers' and listing agents. To make the sample more representative of the overall real estate agent population in terms of age, sex, race/ethnicity, and geographic region, Zillow Group Population Science used statistical ranking to weight the sample to 2019 U.S. Census Bureau American Community Survey benchmarks. However, additional differences between the surveyed agents and agents overall may persist, particularly with respect to transaction volume, local market, and other relevant factors.
About Zillow Group:
Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make it easier to unlock life's next chapter.
As the most-visited real estate website in the United States, Zillow® and its affiliates offer customers an on-demand experience for selling, buying, renting or financing with transparency and nearly seamless end-to-end service. Zillow Offers® buys and sells homes directly in dozens of markets across the country, allowing sellers control over their timeline. Zillow Home Loans™, our affiliate lender, provides our customers with an easy option to get pre-approved and secure financing for their next home purchase. Zillow recently launched Zillow Homes, Inc., a licensed brokerage entity, to streamline Zillow Offers transactions.
Zillow Group's brands, affiliates and subsidiaries include Zillow®, Zillow Offers®, Zillow Premier Agent®, Zillow Home Loans™, Zillow Closing Services™, Zillow Homes, Inc., Trulia®, Out East®, StreetEasy® and HotPads®. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org).
1 Data came from a survey of 376 Zillow Premier Agents who are part of a research panel. Fielded between March 26 and April 1, 2021, the survey asked respondents about the strategies they used or encountered in their last 3-5 transactions as sellers' and listing agents.
2 Zillow Premier Agent is an advertising program that helps connect customers to local real estate professionals.
3 Data based on activity during the first 14 days for sale home listings were posted on Zillow.