Is it Still a Buyer's Market? Homes Selling Before Being Listed Suggests a Shift

This article explores improving Atlanta real estate and discusses whether or not it's still truly a buyer's market.

In the past few years, potential home buyers have experienced the luxury of a flooded market. Dynamic changes to the traditional real estate model; large numbers of foreclosures; and record low home prices, as well as interest rates, have led buyers to believe that an endless supply of affordable homes are at their disposal. New reports and apparent changes in the market are showing that this trend may soon be drawing to an end.

A recent RISMedia article, sourced from the Minneapolis Star's Jim Buchta, confirms that what we are seeing happen in the Atlanta real estate market is not an isolated condition. We learn that decreasing inventory; a change in the structure of real estate transaction; and buyers seeking out and purchasing homes before they officially hit the market is not only occurring in our city, it is a shift that is trending nationwide.

We have found that with the severe inventory shortage in our market area (which seems to be the case all over intown Atlanta), many buyers and their agents are aggressively trying to find homes prior to their officially hitting the market. Buchta’s article substantiated this as something happening throughout the U.S. The discrepancy between those financially able to put their properties up for sale and those looking for a good deal on a new home is growing.

This transition has led to what many are calling a “shadow market.” Real estate is once again moving, but it’s doing so somewhat under the radar. One reason for this is the fact that for quite some time, people have been unable to sell their homes - sellers who are underwater have likely decided to "hunker down" and wait for the market to improve or become a "reluctant landlord". With many potential sellers pulling out of the market, we are left with surprisingly low housing inventory in many Atlanta markets.  

At Red Robin Group, many of our spring sales have been made before we officially listed the property. We maintain a database of agent connections, and these agents are looking for certain types of properties for their buyers. When we meet with a potential seller, often, we may already have a buyer and/or an agent in mind for the house. The entire dynamic of real estate is shifting—while home prices haven't increased dramatically, the activity in the market is definitely picking up and changing in scope.  And, because the simple economics of supply and demand are at work, we believe we will begin to see prices in our intown neighborhoods inch up.

In truth, buyers are still abundant. Interest rates remain low, and buyers know that in the current climate, they can afford to purchase bigger, better properties than they could in previous years.

If you’re ready to sell your home but have reservations because you believe it’s still solely a buyer’s market, you may want to reconsider. Buyers are being forced to change the way they look for properties, and a well-connected broker can help position and market your home to the right people…sometimes before it even goes on the market.

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Péralte Paul June 15, 2012 at 01:58 PM
Hey, Melissa: I'm curious how this plays out in the condo market?
RD June 15, 2012 at 02:13 PM
How could you guarantee that a seller is getting the maximum price if it is never listed publicly? Doesn't the whole supply-and-demand idea go out the window if your demand only consists of one buyer client?
Melissa Wakamo June 15, 2012 at 05:14 PM
This is a good question, Peralte. My primary focus isn't the condo market, so I welcome other agents to respond. But, I think that the condo market was hit so much harder by the downturn that it will likely take much longer to recover. It's a complex issue, but with so many foreclosures and loss of FHA approval in many developments, it is increasingly difficult for buyers to obtain financing in that sector. The few condo buyers I have worked with still seem to have a large inventory to choose from....
Melissa Wakamo June 15, 2012 at 05:31 PM
RD, that's an interesting comment. I can only speak to what has happened with our seller clients and there may certainly be different situations out there. But, at the point we start calling agents and or putting a "coming soon" sign up in the yard, we have already determined what the "list price" would be for the house. That is based on market info and comparable sales. And, the "maximum price" is certainly kept in check by the appraisal part of the process. I don't think the point is that houses are getting bid up in price dramatically because of the inventory shortage -- buyers are definitely still looking for bargains and overpriced homes don't sell. But, if a seller has decided to list their house at $250K and knows that, at that list price, they will likely have to negotiate a bit with a buyer, finding a buyer before the hassle of putting your home on the market that's willing to pay $245K -- a seller may be very happy with that scenario. And, if they're happy, I'm happy. Of course, a seller may opt to list their house and let the free market run its course! There's nothing that says they have to accept that offer before the house is listed.
Péralte Paul June 15, 2012 at 05:51 PM
I was afraid of that. Looks like I'll be holding on to my condo for a while, then.


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