In the highly competitive housing market, stories abound of buyers making all-cash offers and using risky strategies such as waiving contingencies in order to make their bids stand out. But for all the anecdotes of bidding wars and frustrated buyers failing time and time again, the reality is somewhat different for the majority.
Recently published data from Zillow’s latest Consumer Housing Trends Report shows the average buyer submitted just two offers on a home before one was accepted, up from an average of just one bid in each of the last three years. And those taking risky measures like waiving contingencies are still in the minority, with 88% of buyers saying they had a home inspection done before going ahead with their purchase.
Zillow Population Scientist Manny Garcia said that while buyers clearly experience more challenges in the past year, most were ultimately able to buy a home without taking any risks.
“Most buyers continue to get inspections and sellers appear to prioritize higher offers over waived inspections,” he said. As a result, the vast majority of buyers are achieving their homeownership dreams through a combination of research, trade-offs and consideration of multiple options.
It’s not all plain sailing, and the survey shows that first-time buyers do have it harder than repeat buyers in most case. One of the problems first-time buyers face is having a smaller down payment, because they don’t have any equity in a previous home they can tap into, so there offer can seem less competitive versus a bid from an existing homeowner. The data shows that just over two-thirds (67%) of first-time buyers have to submit more than one offer before their bid is accepted, versus 54% of repeat buyers.
Zillow’s survey also reveals that most buyers consider an in-person showing to be essential before they actually submit an offer on a home, despite the rapid growth in virtual tours and 3D tours online. Over 90% of home buyers in the last year took a private, in-person tour of the home they ended up buying prior to submitting an offer, and the majority also attended at least one open house. The average buyer actually saw three homes in-person during the pandemic, with just 5% declining a private tour.
Tom Toole, Team Leader at Tom Toole Sales Group of RE/Max Main Line, told Zillow that technology is playing a useful role in marketing homes. But for most people, it’s still important that they see a home in-person before committing themselves to an offer. Virtual tours really just help the majority of people by narrowing their list of homes to visit to those they consider most promising.
“Buyers still strongly prefer in-person tours, but virtual tours help people see a home if circumstances don’t allow and have helped a number of buyers get a speed advantage in the market. Virtual tours are a great addition to help buyers decide what houses they want to see in-person.
The survey data seems to agree. For most buyers, 3D tours are extremely valuable, with 68% of respondents saying it helps them to get a better feel for a home than static photos. Another 61% said they wish more listings had 3D tours available, and the same number said they prefer to be able to schedule an in-person tour while viewing the home online.
Zillow said the data is evidence that buyers increasingly value virtual tools because they make it easier to shop for a home. It noted that the share of buyers who are at least “somewhat confident” of making an offer after seeing a home through a virtual tour rose to 58%, up from 55% one year ago.
So there you have it. Buying a home perhaps isn’t as difficult as many of the headlines over the past year have made it out to be. And with the housing market now showing signs of cooling amid a slowdown in home price growth, Zillow says buyers can expect to see more options and face less competition as they shop for existing homes.