In bygone years, encountering multiple bids on a single home was a relatively uncommon phenomenon. While specific markets may have witnessed them more frequently, most homebuyers were not accustomed to competing against a multitude of others for the same coveted property.
However, the dynamics of the real estate landscape have shifted in recent years. Persistent housing inventory shortages, combined with a surge in interest in homeownership catalyzed by the COVID-19 pandemic, have made bidding wars a routine occurrence for many prospective buyers.
Assisting a client in emerging victorious from a multiple-bid situation presents a considerable challenge, one that can be exasperating for both buyers and real estate agents alike. These scenarios often appear unjust to buyers, particularly those who have spent weeks or months submitting offers without successfully securing a home. For agents, crafting an offer that distinguishes itself within a competitive field can prove challenging, especially when regulations prevent the sharing of personal buyer information.
Recently, WAV Group conducted a survey targeting individuals who embarked on the journey to purchase a home. This survey aimed to explore their experiences in the context of Fair Housing. Here are some preliminary findings from the study, with the complete results are available in the Fair Housing Survey Report now available.
‘Did you have a fair chance to win the house?’
With multiple-bidding situations becoming increasingly prevalent, the survey sought to gauge how buyers perceived their own experiences in such scenarios. Did they believe they had a fair opportunity to secure the homes they desired, and what influenced these feelings?
Slightly over half of the respondents disclosed that they had been involved in a multiple-bid situation (50.94%). The remaining participants either had not encountered such a scenario (38.00%) or were uncertain about how to respond (11.06%). These proportions remained consistent when examining responses based on the racial backgrounds of the participants, differentiating between self-identified white respondents and respondents of color.
Approximately 46.46% of all respondents felt they had an equal chance to secure the property they were pursuing. This percentage was marginally higher among white respondents (49.33%) compared to respondents of color (45.50%).
For those who believed they did not have an equal chance to secure a property in a multiple-bid scenario, the survey aimed to delve deeper into their reasons for this perception. Respondents were asked why they felt their bidding opportunities were unequal.
White respondents predominantly attributed their inability to secure the property to being outbid by buyers who could offer more money. A significant majority (68%) of white respondents cited financial factors when asked about the fairness of multiple-bidding situations. Additionally, many respondents discussed the challenges posed by competing against cash offers and well-funded investors or “flippers.”
A minority of white respondents either believed that the seller had already favored another buyer or stated that they had received suboptimal advice from their real estate agent.
Conversely, respondents of color who had experienced multiple-bidding situations provided more varied responses. However, a substantial portion of them (62%) also cited financial limitations as the primary reason for not securing the property. Approximately 6% of respondents of color believed that their race played a role in the outcome of their multiple-bid situation.
This group of respondents also highlighted competition from investors and buyers capable of making cash offers. They were more likely to express concerns about being unable to purchase homes in certain neighborhoods they perceived as “out of their league.” Additionally, they mentioned factors beyond race, such as marital status and other demographic indicators, as potential influences on their inability to secure properties, with some stating, “I’m not professional enough.”
For further insights into homebuyers’ experiences in multiple-bid situations and their perspectives on Fair Housing over the past year, download WAV Group’s Fair Housing Survey Report.