Anyone that has lived in this city for at least 6 months (or has a favorite coffee shop other than Frothy Monkey) has earned the name, “Nashvillian”.
Nashville has always been a melting pot — welcoming people from all over.
And while opportunities are ripe for the picking in this city, some may be asking what the cost is for the local homeowner ready to move across town or down the street?
The answer: a bidding war.
With flocks of new neighbors fleeing to Nashville from out-of-state, the unintended consequences can leave some sellers temporarily homeless.
First, let’s dig deeper into the problem.
Ask any real estate professional or buyer/seller in the Nashville area, and they’ll tell you that there is a massive deficit in the inventory of homes for sale compared to the number of buyers looking.
It seems that any well-kept home in a desired area will go under contract within a day or two of hitting the market with multiple offers on the table, for over asking price.
I’ve had 3 or 4 buyers this year lose out on homes in multiple offer situations with offers ranging from $10,000 to $30,000 over the asking price. Homes with 20+ other offers are becoming the new normal.
If you think that’s bad, multiple homes have sold for above $100,000 over asking in certain spots in Williamson Co. One in Brentwood sold for $315,000 over asking.
Why is this happening? Let’s look at the data.
The average housing budget for out-of-towners moving to Nashville in 2020 was $719,500, which was 48% higher than the $485,500 average budget for local Nashville buyers according to a recent study by Redfin.
That means that these out-of-towners simply have more cash to win highly competitive homes.
Additionally, 63% of home buyers in Nashville bought sight-unseen, meaning an offer is submitted without ever stepping foot inside the home.
In 2020, more than two-thirds of Nashville homes sold had multiple offers on them in 2020, and a record amount of them sold above asking price.
Ready for the big shocker?
Inventory in January 2021 is at less than half of what it was in 2020 — 3,195 homes available compared to 6,588 in 2020.
If you put yourself in the shoes of someone thinking about selling their home, you start to see their reservations more clearly.
Sellers are not worried about there being enough buyers for their home; they’re worried there won’t be a home that meets their criteria to buy once all is said and done.
No one wants to have to go through the pain of moving twice. They want a smooth transition.
And no one wants to temporarily rent while they look for their next home.
Lack of inventory breeds more lack of inventory — and those brave enough to list their home have to account for losing out on a few multiple offer scenarios simply because of their home-sale contingency (the purchase of a new home is contingent on the old home selling).
In stark contrast, most out-of-state buyers are either:
- • buying in cash
- • waiving contingencies
- • offering a high amount over asking price
And sometimes all of the above.
This “perfect storm” is undoubtedly multifaceted.
On one hand, the recent 30% property tax hike in Davidson Co. may have caused some locals to want to move to surrounding areas if commuting isn’t an issue and margins are tight.
On the other hand, the societal side-effects of business shut-downs and other strict urban Covid-19 mandates, as well as higher state and city taxes in areas like California, New York, Washington, Chicago, etc. are causing out-of-state buyers to flock to hot real estate markets like Nashville — which also happens to have 0% state income tax.
Plus…hot chicken. We have amazing hot chicken.
With all of this in mind, what can you do to position yourself to win?
Advice #1: Educate yourself on the market, and your criteria before for your next home before you begin the process of selling. Drive the neighborhoods; see how far away it is from your work/school/church, etc. Drive around during rush hour to see if it’ll work for your lifestyle.
Advice #2: Save as much money as you can when selling your home so you can compete with the multiple offer wars that lay ahead. At Scout, we have a fair fixed fee for people listing their homes. You’ll receive a full-service listing experience that won’t be attached to the value of your home. This allows you to retain your hard-earned equity which in turn, gives you more money to compete with in your next offer. Our average client saves $10,000 when listing with Scout.
Advice #3: Don’t be afraid to talk to a Realtor in advance about different solutions and tactics available for your unique situation. At Scout, our number one goal is to educate you, not sell you. Trust me, you don’t want to jump in this market blindly with just anyone. You’ll want a full tactical strategy mapped out.
Advice #4: Reach out to get signed up for off-market homes coming on the market. If one comes up that’s a perfect fit, you can then consider Scout’s instant cash offer — which can close in as little as 2 weeks. It’s a bold play, but it could be worth it depending on the situation.