6 Signs That You’re In A Competitive Real Estate Market

Kyle Hiscock
Published on June 7, 2016

6 Signs That You’re In A Competitive Real Estate Market

How To Know If Your Local Real Estate Market Is Competitive Or Not

6 Signs That You're In A Competitive Real Estate Market

6 Signs That You’re In A Competitive Real Estate Market

Buying a home in general can be tricky, frustrating, confusing, exhausting, and can also lead to a variety of other emotions.  Buying a home in a competitive real estate market can magnify these emotions and feelings.

It’s important that if you’re buying your first home or buying your tenth that you understand what the local real estate conditions are before beginning the house hunt.  Having a strong understanding of the local real estate market conditions allows a buyer to have realistic expectations and to realize what they’re likely to face during their home search.

If you happen to be buying a home in a competitive real estate market, which is commonly referred to as a sellers market, you need to be on the lookout for a handful of telltale signs.  Buying a home in a competitive real estate market is not easy, but if you realize that your local market is a competitive market, you’ll be better prepared.

Below are 6 signs that you’re in a competitive real estate market.  Read on to find out what some of the most obvious signs are that indicate your local market is a favoring home sellers, not yourself.

Low Number Of Homes For Sale

One of the most obvious signs that indicate a competitive real estate market is when there are a very low number of homes for sale.  When buying a home in a competitive real estate market it’s important to understand that you will not be able to be as selective when it comes to looking at homes, since there is such a shortage of homes for sale.

A great real estate statistic to become familiar with to help you understand if the number of homes for sale in an area is indicating a competitive real estate market is called a market absorption rate.  A market absorption rate in real estate is a statistic that provides the number of months it would take to sell the remaining number of homes for sale in a given neighborhood or area, if no other homes were listed for sale.

For example, if the market absorption rate for the Rochester real estate market was 2.5 months, this means it would take 2.5 months to sell the remaining homes for sale if no others were listed for sale.  An absorption rate of 2.5 is a strong indicator of a competitive real estate market.

Every real estate markets absorption rate will be different, but generally a market absorption rate of less than 4 months of homes for sale remaining indicates a competitive real estate market.  Typically absorption rates between 4-6 indicate a balanced real estate market and anything higher than 6 would reflect a buyers market.

Quick Sales

Another telltale sign of a competitive real estate market is that sales are happening in an extremely short amount of time.  If you’re shopping for a home in a competitive real estate market it’s likely that you’ve found out that if you do not attempt to view a new listing the first day it’s for sale, it will be sold before you can view it.

It’s difficult for a buyer to know whether homes are selling quicker than normal, however, a top buyers real estate agent will review statistics such as average days on market to advise a buyer if homes have been selling quicker than normal.  Average days on market is a great indicator for determining if the local market is competitive or not.  By looking at a trend of the past months and possibly years, a buyers agent can determine if the average days on market is different than it would be in a balanced or buyers market.

Multiple Offers

Multiple Offers Are A Sign Of A Competitive Real Estate Market

Multiple Offers Are A Sign Of A Competitive Real Estate Market

Buyers who are looking to buy a home in a competitive real estate market need to accept the fact that they will potentially be in competition with other buyers.  A multiple offer scenario is the best case scenario for a seller and can be a nightmare for a buyer.  In a competitive real estate market, it is extremely likely that a buyer will be in a multiple offer situation.

It’s very important that if you’re buying a home in a competitive real estate market that you know how to win in a multiple offer situation.  A buyer who knows what it takes to win in a bidding competition and who has a top buyers agent representing them will have a much greater chance of not being heartbroken by losing out on a home they love.

Cash Offers

One sign that indicates a competitive real estate market is the presence of cash offers.  I’m sure that you’ve heard the saying “Cash is King.”  A cash offer in real estate certainly has some appeal for a home seller and in a competitive real estate market, cash offers are more frequent.

While cash offers may indicate a competitive real estate market, it doesn’t mean that if you’re buying a home with financing that you cannot buy a home in a competitive market.  There are certain tips for beating a cash offer in real estate that should be followed to improve the chances of beating out a cash offer.

Escalation Clauses

If you’re buying a home and wondering if it’s a competitive real estate market or not, be on the lookout for the term escalation clause.  Another sign of a competitive real estate market is the use of escalation clauses in purchase offers.  An escalation clause in real estate is an addendum that a buyer can elect to include in their offer which basically states they are willing to guarantee to pay a certain amount for a home above their offer up a specified dollar amount.

Recently while selling a home in Pittsford NY, a buyer elected to include an escalation clause addendum with their offer.  The home was listed at $250,000 and the buyer offered $250,000 but indicated by including an escalation clause addendum that they would beat any higher offer by $1,500 but not to exceed $270,000.  The buyer included the escalation clause because there were over a dozen purchase offers on this specific property the first day it was listed for sale.

High Sale Prices

Last but certainly not least, another sign of a competitive real estate market are high sale prices.  In a competitive real estate market it is common to see homes selling at their asking price and even above their asking price.

If you’re unsure of recent sale prices in an area, this is another reason why having a top buyers agent is important since they will have the ability to provide information about recent sales in an area when you’re considering making an offer on a property.  If you see that homes in the neighborhood have been selling at asking or above asking price in a short number of days, you know that you’re in a competitive real estate market.

Tips For Buying A Home In A Competitive Real Estate Market

Tips For Buying A Home In A Competitive Real Estate Market

Tips For Buying A Home In A Competitive Real Estate Market

Once you’ve determined that it is a competitive real estate market, it’s critical that you follow the proper steps and tips for buying a home in a sellers market.  If you fail to do so, you will likely be unsuccessful in your home purchase.  Below are some tips for buying a home in a competitive real estate market to follow.

  1. Hire a top buyers real estate agent – One of the first steps in the home buying process is hiring a top buyers agent.  The reason this is one of the first steps is because a buyers agent almost acts as the “quarterback” during the home buying process.  They are responsible for coordinating showings, preparing purchase offers, making sure contract dates are met, as well as many other tasks throughout the process.  Bottom line, there are tons of reasons why buyers need representation when buying a home.
  2. Get pre-approved, NOT pre-qualified – Yes there is a big difference between mortgage pre-approval and pre-qualification.  Having a pre-approval when buying a home in a competitive real estate market can be the difference of a successful home buying experience or not.
  3. Be prepared to shop for homes quickly –  It’s important that when buying a home in a competitive real estate market that you’re ready to shop, even on short notice.  If you are looking to purchase a home and see a brand new listing, you must contact your real estate agent immediately, otherwise you maybe to late once you get around to it.
  4. Be prepared to make a decision – Buying a home is a huge decision and moment in anyones life.  It’s important though that if you’re buying a home in a competitive real estate market that you’re ready to make a decision.  Buyers who delay on making a decision on a potential home typically end up kicking themselves because the home they wanted to buy is sold by the time they make a decision.
  5. Forget about low ball offers – It’s not impossible that a low ball offer will not be accepted in a competitive market, however, 99% of the time it will not.  Knowing how to determine how much to offer for a home is important and if a home is priced well, submitting a low ball offer is a waste of time in a competitive market.   
  6. Know what contingencies you can and/or will include – There are many real estate contingencies that you can choose to include in a purchase offer or choose not to include.  When buying a home in a competitive real estate market, it’s critical that you know which you will include and which you will not.  In most cases having a home inspection when buying a home is recommended, however, waiving the inspection contingency can make an offer more attractive to a seller.

Final Thoughts

If you’re buying a home, knowing whether you’re in a competitive real estate market or not is vital to the success of your home purchase.  The above 6 signs are some of the most obvious indicators of a competitive real estate market.  If your local market is highly competitive, you need to be prepared and follow the above tips for buying a home in a competitive market.

Other Top Home Buying Resources


If you’re buying a home in Rochester NY, you will or have seen many or all of these signs.  The Rochester real estate market is a very competitive real estate market right now.  As mentioned above, understand the status of the market is important but also having a top Rochester Realtor® is vital.  If you do not have a top Rochester Realtor® yet, contact me, so we can discuss buying a home in the competitive Rochester real estate market.

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About the authors: The above article “6 Signs That You’re In A Competitive Real Estate Market” was provided by the Keith Hiscock Sold Team (Keith & Kyle Hiscock). With over 30 years combined experience, if you’re thinking of selling or buying, we’d love to share our knowledge and expertise.

We service the following Greater Rochester NY areas: Irondequoit, Webster, Penfield, Pittsford, Fairport, Brighton, Greece, Gates, Hilton, Brockport, Mendon, Henrietta, Perinton, Churchville, Scottsville, East Rochester, Rush, Honeoye Falls, Chili, and Victor NY.

© 2016, Kyle Hiscock. All rights reserved.

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6 Signs That You’re In A Competitive Real Estate Market
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