January is typically a quiet time for Denver-area home sales, with most buyers choosing to wait out the winter so that they can tour interesting properties when the weather's more pleasant. But not this year. The demand for showings is at such an insane level that many house hunters are having a tough time simply scheduling a time to look at a property, much less having a realistic chance to win a bidding war for one.
A house in Arvada whose sellers are represented by Victoria Macaskill of Denver Homes is a case in point — and her story of what happened when she scheduled it for showings this past weekend is emblematic of how crazy the metro real estate scene has gotten.
The sellers, who are still catching their breath after the whirlwind of the past several days, have given permission for their experiences to be shared generically, without specific reference to their address or the original sale price. But we can say it was in the $500,000 range, below average for the current market, whose average price tag blew past $625,000 in November. That made it appealing to first-time homebuyers who've had slim pickings locally of late.
Macaskill listed the home at 11:30 a.m. on Thursday, January 14, and by 8 a.m. on Friday, January 15, sixty showings had been scheduled and she already had an offer in hand. The total eventually topped out at 82 showings, for which 75 would-be buyers turned up — and by the end of the weekend, there were no more windows of opportunity open. As Macaskill notes, "Every slot had been taken."
In the end, the sellers received nine offers for their home, one of which was for cash, and seven of the bids offered an appraisal gap; the term translates to an agreement by the buyers to cover any potential difference between the appraised value and the offer price. The highest offer was 7.9 percent (in excess of $30,000) over the asking price, but because those particular buyers didn't include an appraisal gap pledge, the sellers went instead with a bid of 6.5 percent above list.
"Due to low inventory, demand is at an all-time high," Macaskill says. "But what's alarming for buyers is how difficult it can be to even get an appointment in to see a home, let alone compete in a multiple bid situation. Homes in desirable areas in competitive price points book up so quickly that buyers are unable to get showing appointments. This most commonly occurs when homes are priced sub-$500,000."
Then there are the challenges brought on by the pandemic. "COVID guidelines are impacting the buyer's ability to see a home," she explains, since they "recommend that there be no overlapping showings on houses to prevent any cross-contamination between parties. This is a sound guideline and protects the agents and buyers. But due to the high buyer demand, showings can typically only be scheduled for a fifteen- or thirty-minute window to accommodate all the buyers who want to see the home over the weekend. Pre-COVID, this was not the case. If an agent had four houses, we could schedule each house for a one-hour window, and overlapping showings were allowed. This provides for some flexibility when planning the driving route, as you have a window to arrive at each home. It's difficult to predict how long a client may take to look at any one house or if there will be traffic delays, and having that one-hour window allows for some flexibility in the home tour. Overlapping showings also allowed for more than one agent to show the home at the same time, which was not uncommon."
The challenge under the current circumstances is that "you may not be able to get a showing appointment for your client to see a home," she continues. "This happened with one of my buyers a few months ago. Every single showing window was booked for the weekend. The seller would not open additional days for showings, as they had so much interest in the home. This is devastating for a buyer to not be able to get into a home. To combat this, the minute a home lists, showing agents will preemptively book a showing slot to ensure they have one available should a buyer need one over the weekend. This compounds the problem for buyers, as now fewer slots are available for showings. It's a catch-22."
Still, appointments work better than open houses, "a good solution in the past," Macaskill notes. "But it's a risk to hold an open house during COVID. Agents need to adhere to the health department's strict guidelines as far as assessing how many people can be in the home at one time to avoid cross-contamination. Additionally, it's a risk to the seller if an attendee at the open house contracts COVID in the house. For various safety reasons, open houses are not a great idea during a pandemic."
Sellers are feeling stressed over the situation, too. According to Macaskill, three people tend to tour during the average showing — which translates to well over 200 people visiting the Arvada home over the weekend. "For some, that's not a risk worth taking during a pandemic," she admits. "This is one of the reasons our inventory is so low right now. If you don't have to sell right now, it may not be worth the risk to have 200 or so people through your home over a weekend in the middle of a pandemic."
For the Arvada sellers, these factors resulted in a weekend that Macaskill sums up in two words: "just unreal." And yet scenarios like this have become almost commonplace in Denver these days.
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