Saturday’s Real Estate section featured a cover story on “flash sales” – or sales that occur about a day after a listing’s initial debut.
The story reported that in March, 350 houses in the Washington region sold within two days of listing, up from 237 the year before, and that 174 houses last month sold in less than one day, up from 134 the year before.
We asked Glenn Kelman, president and chief executive of Redfin, to discuss how flash sales are playing out in this tight market.
You report that Washington is the 13th fastest real estate market in the nation. What are the factors driving fast sales here?
What’s driving flash sales generally are mobile phones that now get instant alerts. Notifications that would have occurred within 24 to 36 hours now interrupt the home buyer within minutes of a listing’s debut. In Redfin’s iPhone application, the alert appears in an application alongside a button to schedule a tour immediately.
More than just about anywhere else, people in D.C. are addicted to iPhones, BlackBerries and Android devices. The other major factor is the inventory crunch, with the number of homes for sale in the D.C. area down 29 percent even as low rates have lured record numbers of home buyers into the market. About 70 percent of the homes we’ve bid on this year have involved a bidding war. Everyone in the real estate market here is trying to get there fastest with the mostest.
How do flash sales in this region’s market compare to other parts of the country?
There have been 1,317 flash sales [in the Washington region] in the past six months. This is not as high as areas in the Midwest, where sellers who immediately get offers are more likely to take them. In Washington, D.C., as in California, sellers are more deliberate about creating the conditions that result in a bidding war, and less tempted to take the first offer they get, even when it’s a good offer.
What’s the best way to get in on a flash sale if you’re a buyer or a seller?
Subscribe to instant alerts. Use a brokerage site [that can] get updates every few minutes directly from MRIS, the local database used by real estate agents to list properties… Work with an agent using modern technology, who can react fast to get you into the place. Get a pre-approval letter. Think through what you want in a house and what you’re willing to pay so you don’t make a mistake in the heat of the moment.
Some real estate agents have expressed skepticism about flash sales, saying they may not be as advantageous for buyers and sellers. The process, they say, makes it even more difficult for first-time home buyers to get a chance to bid and by selling a house in a day a seller may be losing out on other more lucrative offers. What do you think of those points?
They’re excellent points. Many sellers would be better served waiting for others to see the property and make an offer, just to find out who would be willing to pay the most. But some buyers are so desperate that they make an offer the seller can’t refuse. For buyers, we think that speed matters. You may decide to wait, after seeing the place, to make an offer. But it’s always best to see the place first.
Also I’m wondering if you buy a house in less than 24 hours, does this possibly increase your chances of overlooking problems and making a purchase that you will regret later?
For most buyers, flash sales aren’t a good idea. Flash tours yes, but an actual offer? The house better be perfect. Many buyers just feel pressure to compete quickly against investors who are used to making financial decisions far more quickly than retail
Do pre-listing agreements some real estate agents make with potential buyers harm the open market concept? Is it fair that these sales are essentially a done deal before they hit the open market?
If you are a real estate agent with a bona fide home to sell, it is in your client’s best interests to show the whole market the property. The only beneficiary of a private sale is usually the real estate agent who brokers that sale.