It was mid-December 2020 when Northern Virginia real estate agent Kate Herzig drove out to visit a house seller in Woodbridge. The home was scheduled to be officially listed on Zillow and ready for buyers on January 1, 2021. Herzig, of EXP Realty, wanted to take a look at the house and talk to its owner, Tony Seese, an IT guy working for a DC law firm, who had taken a few photos of the house that were being used for a prelisting notice on Zillow—prelisting being a sort of information-only listing just to see how much interest might be generated.
Herzig and Seese had already agreed on $399,900 as the asking price. But the prelisting was having an immediate effect. “In less than a day of the prelisting, Kate had several people call her,” Seese says. “I had people driving by taking a look. There were people in my front yard at 8 a.m. looking around the day she came out for a visit.”
The same day the house was prelisted, an offer had come through for more than $15,000 over the asking price—$416,000 total. Seese was pleased. Herzig was there to close the deal.
But that’s not the end of the story.
They’re Coming for You
The group in the front yard wanted to talk to her, Herzig says. “They were trying to negotiate with me, right on the spot. Their agent even told me that she would kick back part of her commission to make the sale and asked what she could do to make the sale work. I was like, ‘Whoa. We are not even to market yet!’ There were already five offers on the house just from the prelisting.”
The group was trying to tell Herzig not to accept the offer Seese had already accepted, he says. “They weren’t arguing with Kate, but just curious,” he says now, recalling how he watched the situation unfold out his window. Then Herzig left.
But the group stayed in his front yard. “They came up to me and asked me to please not consider the offer Kate told them about,” Seese says. “They said they would go $10,000 to $20,000 over whatever that offer was. I said, legally I can’t not accept the offer I had already accepted. They were very insistent about it, though. A guy actually said to me that he would give me cash.”
The Market Is Out of Control
And there it is—yet another story about home sales in Northern Virginia that have had real estate agents scratching their heads; sellers bumping up their list prices and then watching everyone bid way over that price; and buyers ready to buy any house in the region at any price after waiving everything normally done before a house sells.
Buyers are motivated. They have the cash, and interest rates are low. They want the house, sometimes before they even see it. And they want it now.
Herzig says that she has run across more people willing to do all-cash offers. “I see more people being financially able to offer more than they ever had been before. Or maybe they are just more willing to part with their money. And yes, low interest rates are adding to that frenzy.”
She recently worked for a buyer on a one-bedroom condo in Dupont Circle that got 21 offers and sold for $101,000 over the asking price. A one-bedroom condo! She also has had three listings sold sight unseen—listed on the internet with a “coming soon” status, but not allowed to be shown. “With that status, an agent may not let anyone inside until the house is active on the real-estate advertising multiple listing service,” Herzig says. But selling sight unseen “happens frequently now,” she says.
Talk to any real estate agent in any part of the country and ask them about the market today, and you’ll get the same response: It’s out of control. A world of crazy deals.
“People have just lost their marbles,” says one real estate agent in the Midwest.
There’s No Escape
Home sales in the region are like nothing seen before, or even imagined, fueled mostly by low interest rates and driven by the ongoing pandemic, which has caused people to seek refuge in suburbia with a big yard and plenty of space for their home office.
Website developer Craig Gorman and his wife, program manager Alicia Kacel, moved to an apartment in the DC area from California in February and began looking for a home in Northern Virginia—jumping right into the home-market craziness here.
They offered $100,000 over the $920,000 listing price for a Vienna home. It was a nicely landscaped house with good curb appeal, a kid- and dog-friendly neighborhood, and a homey, charming interior. Gorman and Kacel were smitten after their initial walk-through. “We saw some bids for that house,” says Gorman. “A lot had gone between $50,000 over list to $125,000 over and weren’t winning. So it became tough to say where our target was. But we didn’t want to go as high as $125,000 over list.” The couple settled on going higher with their offer—$102,000 over list—for a total of $1,022,000.
Another buyer outbid them by another $28,000—a total of $130,000 over list. But that buyer’s financing was a little less secure, so Gorman and Kacel won.
What really amazed Gorman was what they saw during their house hunt. “You would just roll up on one of these homes and there were literally half a dozen cars parked in front of it,” he says. “It almost felt like the same dozen people were doing what we were doing. We were literally going house to house every weekend, each getting about a dozen offers coming in. So it was like, Are these the same people every time? You just had to wonder if these were the same families we were competing against.”
They looked at one house during their search where people were streaming in from every direction. “They were walking around the backyard, around the front of the house, inside the house. It was mobbed. It was like everyone was at the open house at once instead of coming in at different times,” says Gorman. “I just never expected that.”
There’s Nothing You Can Do
“It’s a thriving market,” says Ryan McLaughlin, CEO of the Northern Virginia Association of Realtors, in the understatement of the year. NVAR represents about 13,000 Realtors in the area doing about 22,000 transactions a year. “What we’ve seen in the last year to year and a half has really defied expectations in a good way. The market is extremely hot, with no signs of letting up, and sellers and buyers both need to have their finances in order so that they can act quickly.”
In April alone, NVAR members closed $1.7 billion in volume. That’s 50 percent higher than April 2020, McLaughlin says.
A real-estate market forecast that NVAR did with George Mason University in late March showed growth in the inventory of condos in Arlington and Alexandria, indicating more vacancies in condos and demonstrating a pattern of movement away from the city core to the westerly suburban areas of Northern Virginia. “We are projecting prices will continue to rise, home sales will continue to rise, and we expect in the markets we cover, inventories will continue to shrink,” McLaughlin says.
But home sales, including condos, can be affected by other developments, such as the new Amazon headquarters expected to be in operation by 2025. “There was a condo right across the street from where the new Amazon HQ2 is being built in Arlington that sat on the market for several months with very little interest,” says Mara Gemond, a Falls Church–based Redfin real estate agent. “It went through a couple of price drops. But then it sold for $80,000 more than asking price overnight when the HQ2 deal was announced.”
Attorney Dennies Varughese, who works at the DC-based law firm Sterne, Kessler, Goldstein & Fox, bought a house in Ballston about a year ago for just over $1 million and sold it in May, making a quick $40,000 on the deal.
Varughese says that he has heard about disputes between buyers and home builders about pricing homes due to the skyrocketing cost of lumber and other home building resources. “But I have heard that the real estate market might go even higher now with COVID starting to lift, and that there is more foreign investment coming.”
Maybe You Should Just Wait It Out
So what’s the upside to this real estate craziness? There’s good and bad news, depending on whether you’re a seller or a buyer.
Daryl Fairweather, chief economist for Redfin, says that about three-quarters of home offers face some sort of price competition. “But I think we are at the peak of competition now in 2021.”
She advises buyers to keep an eye on mortgage rates. “Sellers’ asking prices may be starting to flatten. And the drop in mortgage purchase applications tells me that some buyers are dropping out due to the lack of affordable homes for sale. If these trends continue, we can feel more assured that we are not in the midst of runaway home-price speculation or a housing bubble.”
There is a subtle correction happening, according to the National Association of Realtors, a positive change on the horizon for home buyers and perhaps an end to the frenzy.
“Contract signings are approaching pre-pandemic levels after the big surge due to the lack of sufficient supply of affordable homes,” said Lawrence Yun, NAR’s chief economist, in a late-May press release. “The upper-end market is still moving sharply as inventory is more plentiful there.” Yun anticipates housing supply will improve as a whole as soon as this fall.
“Just be patient,” is Gorman’s advice. “You have to know what you are getting into. In the end, you just can’t get attached to a home you want to buy. Take breaks from house hunting, like maybe take the weekend off if you have the time. Do it for your sanity. Know that the house you want could be your home, but don’t get attached. You are just going to get heartbroken.”
There is a tremendous value in homeownership, McLaughlin says, with the chance to build equity in your home. “Find your American dream,” he says. “It’s a really good time to be a home buyer.”