Last month, the Associated Press reported that bidding wars were rampant in Portland. “Fevered Portland homebuyers pay more than asking price,” read the headline of a story that ran in the Oregonian, highlighting ten Portland homes that sold anywhere from 12% to 76% above the asking price.
How much of this is media hype, and how much is true?
Let’s look at the latest data from the RMLS to get to the truth:
The average time to sell a home (receive an accepted offer) in the Portland metro in Feb. 2017 was 62 days!
The hottest part of town, North Portland, averaged 54 days.
The hottest suburb in the Portland Metro, Beaverton, averaged 45 days.
These RMLS averages are no lies, just hard data. All the homes in the Portland Metro cannot be going multiple offer with an average of 62 days to get an accepted offer. Of course, a lot of these homes sat over the difficult holiday season (read our month by month break down of the best time to sell a home in Portland) but throughout the year, it is unlikely the Portland Metro average will ever drop under 30 days.
Bottom line: the news media focuses on the sensational. Often that is all you’ll hear out of them. It can create a distorted picture for Portland home sellers and home buyers.
What makes a Portland home go into a bidding war?
Many homes for sale on the Portland market will, in fact, attract more than one offer. Many will not. There are two primary factors: first, the price. Many real estate agents will encourage the seller to price the home at just under market value in hopes of creating a bidding war. Occasionally, a real estate agent is not paying attention to the Portland real estate market and prices it lower than it should go, creating an instant multiple offer situation because of a mistake, not because of a strategy. I’ve seen homes go into a bidding war and still sell for less than their neighbors! Second, the neighborhood makes all the difference. In some Portland area neighborhoods, and in some Portland suburbs, multiple offer situations are the norm. In others, it is still not the case! Your real estate agent needs to know the difference. If you are in an area where multiple offers are not common, it would be a mistake to price your home slightly under the market in hopes of a bidding war. Most likely, you will end up selling for less. In other neighborhoods, multiple offers are so common, it can be a good idea to price the home at market value or a little under to get buyers excited.
How does a Portland home bidding war work?
Typically the seller will delay accepting offers for a few days, creating an offer window. The seller will collect offers and then set a time to pick the one they like best. During this time, buyers agents will typically be notified by the listing agent as to how many offers have been collected (best practice). Then the buyers will have a chance to increase their bid before the seller makes a final decision. Typically this is a blind bidding process, but the buyers agents know, the more offers there are, the higher they are likely to have to go to win the bidding war.
This is where having a good buyer’s agent is essential. Read out about our top 1% buyers team in the Portland metro here. We don’t have a crystal ball that can tell you whether your offer will be accepted, but after performing hundreds of transactions in the Portland market, we can get a pretty good idea of what is likely to beat out the next offer. We also will advise you when to walk away. It’s better to pass up on the home and continue looking for something in your price range, than to allow the sense competition to convince you to do something you’ll regret down the road!
There’s no reason for buyers to pay 76% over the asking price, unless, of course, they want to. Meanwhile, the “bidding war” homes in the articles found online are the exceptions, not the rule. With the median home price up 12%, some homes are going to be mistakenly underpriced for the market, while others will start slightly under value to create a multiple offer situation. Ask your Portland real estate agent whether offering more than the asking price makes sense, and don’t be fooled!
How is the Portland real estate market doing now?
“Mixed activity” is how the RMLS Residential Review describes what happened in Portland in February 2017. Two months into the new year, some numbers are pointing to the real estate market slowing down (slowing down, in reference to a scorching hot 2016 real estate market), while others indicate it is still a robust sellers’ market.
More sales went pending in February than the prior month, a 19% increase. But, pending sales on Portland homes did see a year-over-year decrease of 15%. The number of new listings saw a similar pattern — down 13% from the same month last year, but up 14% from this January.
There were fewer closed sales this month than either February 2016 or January 2017. Meanwhile, inventory increased slightly, from 1.7 months in January to 1.9 months in February, a bit better than last year’s 1.8 months of inventory in February. Inventory, the measure of how long it would take all available homes to sell off the Portland market if no new homes were listed, has been at historical lows, never rising above 2 months in all of 2016.
What’s the average price of a Portland home? In fact, that number rose above $400,000 in February — that’s the year-to-date average. That’s a 12.1% increase from the previous year. And in the same comparison, the median Portland home price increased 12.9%, to $350,000.
Stayed tuned to our Portland real estate market blog. You can sign up for monthly summaries of our articles here. If you ever need real estate assistance, contact your local Portland Metro experts, the Stephen FitzMaurice Team!
Stephen FitzMaurice, Realtor is a top 5% real estate agent in the U.S. and top 1% agent in Portland. Principle Broker in Oregon, he has been licensed since 2003 for residential real estate sales in the Portland Oregon metro area. Call him direct: 503–714–1111. See his listing package here. See his buyer’s team here.