The Mutschelknauses’ purchase offer was contingent on the sale, so they had an incentive to accept a buyer’s offer quickly.
“We received a full-price offer for our home, so even though we were a little nervous that we might be leaving money on the table, we were confident that we were getting the upper end of what we could expect,” says Joe Mutschelknaus. “Even if we had gotten a higher price, we weren’t sure if it would appraise for that amount.”
You’ve heard of flash mobs and Flash Player: Now there are “flash sales” — a term the real estate brokerage Redfin coined to refer to homes that sell in a day or less.
When too few homes are available for sale, buyers and their agents are forced to move fast when a home comes on the market. Thus, some agents are pre-marketing their sellers’ homes to ramp up the possibility of a deal the day a home is entered into the multiple listing service.
The quick sale has advantages for buyers and sellers who want to get ahead of the competition and avoid dragging out the process. But some experts cite some pitfalls: In going for the early offers, sellers might miss out on some potentially higher bids later. And buyers in those quick deals often waive inspections, potentially harming themselves later when they wind up spending thousands of dollars to correct problems that could have been identified early and fixed by the seller.
“Flash sales are clearly an outgrowth of the imbalance of supply and demand in attractive areas,” says John L. Heithaus, chief marketing officer of MRIS, the Rockville-based multiple listing service for the Washington region. “Flash sales don’t do buyers any good, because rationality goes out the window when competition kicks in. Sellers in a flash sale are likely to wonder if they could have gotten a better price for their home.”
According to data firm RealEstate Business Intelligence (RBI), a subsidiary of MRIS, 350 homes sold in March within two days, up from 237 in March 2012. Also last month, 174 homes were sold with zero days on the market, up from 134 in March 2012.
Inventory is at near-historic lows. From March 2012 to March 2013, the number of listings, according to RBI, fell 40.12 percent.
Although data — including days on the market — can provide some information about fast home sales, Ron Sitrin, a real estate agent with Long & Foster in Washington, says statistics can’t tell you what’s happening behind the scenes.
“In some cases, buyers or their Realtors have advance notice that a home is coming on the market,” says Sitrin. “Buyers want to get into a house before it’s listed and to avoid the competitive market at all costs.”
Tonya Nelson, a realty agent at Redfin in Falls Church, who worked with the Mutschelknauses to sell their Arlington home, says sellers benefit from a flash sale because they don’t have to keep showing their property.
“Buyers are usually making good offers that appeal to sellers,” says Nelson. “In Joe and Kerry’s case, they not only got the full asking price, but they were also able to rent back the home so they had some extra time before they have to move.”
Other agents are more skeptical of the benefit of flash sales for sellers.
“When sellers accept an offer before their home is listed or on the first day, they haven’t tested the market,” says Robyn Burdett, an associate broker and vice president of Re/Max Allegiance in Fairfax City. “They didn’t allow the market to determine their price and terms but took what looked to be a good offer.”
Surprisingly, not all sellers are motivated solely by price, says Sitrin.
“Some homeowners would rather not have the hassle of people coming into their home, or they don’t want to fix it up and would rather sell ‘as is,’ ” says Sitrin. “If your mortgage is paid off, you bought your house for $40,000 decades ago and now it’s selling for $800,000, then you’re more concerned about selling your home and don’t care if you got $20,000 less for it than you could have. It’s different for a seller who’s moving up, because that seller needs every penny and should keep it on the market for at least a few days.”
Burdett says that some sellers have a valid reason for selling their home before it officially goes on the market, such as difficulty showing the house because of pets, young children or elderly parents.
Tom and Anna Kate Murphy worked with Burdett to sell their home in Burke, a single-family house that sold in one day for $525,000.
“The house went on the market on a Friday, and we got an offer on it that day,” says Anna Kate Murphy. “We had an open house scheduled for Sunday, but we decided to accept the first offer we received because it was a full-price offer, and we didn’t want to wait. Another home like ours had been listed at $485,000, and buyers got into a bidding war, but we felt like our house was priced competitively but not too high.”
Burdett says that other sellers she has worked with received an offer within two hours of going on the market but chose to wait two days to accept the first of the five offers they received.
Gretchen Koitz, principal of the Koitz Group with Keller Williams Capital Properties in Bethesda, says that although three to five days on the market is typical in our market today, homes listed as sold after zero days on the market are becoming more common.
“Zero days reflects the fact that agents are reaching out to other agents who do business in a certain neighborhood or building to find listings before they go on the market,” says Koitz. “It’s totally up to the homeowner whether to sell without exposing their property to such a hot market. On the other hand, the purchaser will usually make it worthwhile to accept a prelisting offer by offering a great price and eliminating contingencies.”
Koitz says that some sellers think a quick sale is worth the possibility of a lower price if they can avoid being “nickeled and dimed on everything by the buyers.”
Heithaus suggests that sellers get back-up offers by listing their home on MRIS as “under contract with a kick-out contingency” in case the offer they accepted falls through.
Burdett says she belongs to the Top Agent Network, a networking group of Realtors who are among the top 10 percent in their area in sales volume. The network sends out prelisting information to members so they know what’s coming on the market.
“Some Realtors call and ask, ‘What does my buyer have to do to get this house today?’ ” says Burdett. “The best way is an all-cash offer with no contingencies, including waiving an appraisal.”
Still, house hunters who enter these quick deals should go in with their eyes wide open, experts say.
“Buyers who remove contingencies are setting themselves up for potential problems,” says Heithaus. “They have to remediate any issues with the house themselves if they don’t make the sale contingent on a home inspection.”
Koitz says buyers must do their research and buy only when they are comfortable with the price.
“It’s the same rules as always for buyers, but it’s more important than ever to follow them,” she says.
Sitrin says that the downside for buyers is that they feel pressured to move fast.
“I tell buyers to take as long as you need to find the home you want, but once you find it, you should rush to make an offer,” says Sitrin.
Michele Lerner is a freelance writer.