The dog days of summer are not here yet, but a quick walk outside into the searing heat can sometimes feel more like a swim, with the blazing hot sun looming overhead and the air hanging like a damp overcoat, heavy under the weight of its own humidity.
For the many visitors who come here on summer vacation, the heat can be a selling point. For those of us who are lucky enough to call the Wilmington area our home, the heat can seem like a great excuse to stay inside and shop, get work done or putter around the house.
The real estate market has been just as hot as the weather, and many are opting to stay inside in the air conditioning while they shop instead of venturing out into the real world to look at a home in person and “kick the tires,” so to speak.
According to a survey recently published by Redfin, more than 40 percent of home buyers from the Millennial segment of the population reported they had made an offer on a home sight unseen.
Across the broader portion of the population actively seeking a new home, the number of people who reported they had made an offer without a first-person viewing stood at 33 percent, up from 19 percent a year ago. The uptick in numbers was a surprising development, though I am one of those people in the 33 percent who made an offer on a home prior to seeing it in person.
Of course, the summer heat likely has nothing to do with the change. Instead, the increase in this trend is probably due to the heat of the market and the fear of missing out. When a home that is accurately priced hits the market, people want to get it under contract and lock it down as fast as possible, before someone else does.
Additional influencers are likely the quality of listing photos and virtual tours, combined with the comprehensive amount of online information that is available pertaining to specific neighborhoods, properties, demographics, trends, etc. To put it simply, an informed buyer is a more confident buyer, and the added availability of information only makes it that much easier to justify staying inside and clicking a mouse or making a phone call.
As proof of the increase in technological sophistication that has occurred over the past few years - and the heat of the real estate market - there has been a large upswing in the number of websites using Automated Valuation Models (AVMs) as a hook for potential sellers. To quickly provide homeowners with an estimate of a likely sales price, these
AVMs use sophisticated computer algorithms to analyze swaths of data sets, search for patterns and interpret the relationships between the numbers.
According to the National Association of Realtors, the home value estimates put out by these AVMs are often wrong. In spite of their cleverness and complexity, AVMs fail to acknowledge many important factors included in a standard appraisal, such as neighborhood and property characteristics, comparative market analyses and market data.
The National Association of Realtors is seeking to warn potential sellers about the inaccuracy of AVMs and make people aware they cannot be used as a substitute for an appraisal, or to serve as the source for a loan approval. It is worthwhile to note that a home is only worth what a buyer will pay, and AVMs were basically just developed as a marketing tool to attract more people to use the websites that offer them.
For an honest assessment about the state of the real estate market or some no-nonsense advice about your goals, give me a call at the number below.
Patrick Stoy (NMLS Numbers 39527 and 39166) has 18 years of mortgage lending experience. Patrick is CEO of Wilmington-based Market Consulting Mortgage, which he started in 2005 with a mission to build lifelong customer relationships by providing real value. To learn more about Marketing Consulting Mortgage, visit www.macmtg.com. Patrick can be reached at [email protected] or 910-509-7105.
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