Bidding wars hit lowest level of 2021

Only 58.9% of home offers faced competition in September, the lowest level for 2021 so far, according to a market index produced by Redfin based on offers written by its agents. That’s down from a peak of 74.3% in April. September also marked the fifth consecutive month of declines in bidding wars.

Still, homes are selling quickly: 86% of homes sold in September were on the market for less than a month, according to the National Association of REALTORS® latest housing report. About 33% of homes that went under contract had an accepted offer within just one week of being listed on the market.

45% of homes sold at or above list price, up from 22% in 2019.

Bidding war winners are getting cold feet

Some home buyers are reportedly backing out of purchase contracts due to second-guessing the contract price. That is prompting some listings to return to the market after a bidding war.

Fifty-four percent of more than 1,100 real estate professionals recently surveyed by HomeLight, a real estate referral site, said they have seen or heard of buyers backing out of contracts after having regrets.

After losing out in several multiple offer situations, a buyer may head into a new bidding war with an “I’ll offer anything” attitude. “They win and for a moment they’re happy about it,” the report says. “But now they have several weeks to mull over their decision before the deal closes. They crunch the numbers again and experience pangs of regret over the ridiculous price they agreed to pay. They begin to obsess over flaws with the home that they initially overlooked.”

So then they approach their real estate agent to look for a loophole and a way out. It may be through the inspection contingency, assuming they didn’t waive it.

But once they walk away from the deal, “the house goes back on the market with a stigma that there’s something wrong with it,” the report notes.

Housing moving past pricing peak

The rate of home price growth has started to slow, and the competition for homes may be showing some signs of easing somewhat.

“The market’s topping out,” Mark Zandi, chief economist at Moody’s Analytics, told realtor.com®. It’s “starting to show cracks. It feels like we’ve hit the apex, and we’re moving to the other side of it.”

But that doesn’t mean the housing market is heading for a bubble that is bound to burst. Mortgage lending has remained tight. Real estate economists have long said the current frenzy in the housing market is no housing bubble that is reminiscent of nearly a decade ago with the run-up in real estate.

Economists are generally predicting an overall slowdown in prices and more moderation rather than any major downfall.

Home buyers are waving their contingencies

To win a bidding war, more buyers are waiving appraisal and inspection contingencies, according to the latest REALTORS® Confidence Index survey.

Here is the full list of contingencies buyers are removing:

Appraisal contingency (28%)

Inspection contingency (25%)

No contingency was waived (22%)

Financial contingency (11%)

Home sale contingency (9%)

Title contingency (2%)

Other (2%)

Would you waive your contingencies when submitting an offer on a home?

Source: Survey of more than 3,300 REALTORS®.