Potential mistakes that a home buyer can make that could jeopardize their loan approval

I’m going to go over some very important rules of thumb for buyers who are under contract to buy a home, and are using a loan to make the purchase.

These are a few of the biggest potential mistakes you can make.

1. MAKING LARGE PURCHASES OR APPLYING FOR NEW CREDIT - Any significant changes to your financial situation can impact your eligibility for the loan or the interest rate you qualify for.

This means that while you’re applying for a mortgage and waiting to close on your home, it is not the time to finance a new car, or a new living room set, a washer or dryer, or apply for a new credit card. These actions can raise your DTI (Debt To Income ration) and will seriously jeopardize your loan approval.

2. CHANGING OR QUITTING JOBS - Changing jobs or quitting during the loan process raises major red flags for lenders and gives serious doubt about your stability and reliability.

If you have to change jobs during the home buying process, let your lender know as soon as possible so you can get them whatever documentation they need.

Ideally though, it’s best to wait until after you’ve closed on the home before you pull a Johnny Paycheck and tell your boss to ‘take this job and shove it’

3. FAILURE TO DISCLOSE ALL INFORMATION TO YOUR LENDER - from the time you pre-qualify for a loan and throughout the entire loan approval process, be very upfront and transparent with all information. If they’re are issues that could impact your qualification for a loan, it will likely come out eventually, better to know sooner than at the last minute so there is time to deal with it.

4. NOT ASKING QUESTIONS - The home buying process involves numerous decisions and unfamiliar terminology. Don't hesitate to ask questions, no matter how big or small they may seem.

Ask questions about the different loan programs available, the interest rates and fees associated with each, how long the interest rate is locked in, and the overall process involved in obtaining a mortgage.

This will help you to select the best options for your situation.

Home buyers asks agent to withhold a material fact. Buyers & sellers have implied duty of good faith

I’m going to go over a legal Q&A published by the NC Association of Realtors.

It’s a real-life question from a realtor

A home buyer needs to sell their existing home in order to obtain a loan and close. The buyer receives notice that the people who are buying their current home are terminating their offer.

1. The buyer demands that their agent not tell the home seller about the termination.

2. The buyer is considering whether to tell the seller that if the seller does not refund their due diligence fee, they will delay terminating the current transaction all the way through the grace period of the contract.

The guidance from the real estate commission.

1. The buyer's agent must immediately disclose to the seller or listing agent about the termination. There is ample and long-held guidance that either party's inability to complete the transaction is a material fact, and they specifically mention a buyer's inability to qualify for a loan.

Real estate agents are duty-bound to notify the other party of a material fact. Failure to disclose a material fact is the number one reason realtors are disciplined.

2. As for the strategy to obtain a refund of the Due Diligence Fee, the buyer’s agent should advise them to discuss the strategy with legal counsel, who should inform them that every contract in North Carolina has an implied duty of good faith.

North Carolina Courts have “consistently held that [i]t is a basic principle of contract law that a party who enters into an enforceable contract is required to act in good faith and to make reasonable efforts to perform his obligations under the agreement.”

In this situation, it sounds like the buyer may attempt to violate that duty in an attempt to obtain a refund of the Due Diligence Fee.

Assisting your client in this endeavor may expose you to liability and violate both the License Law and the Code of Ethics.

Tempted by the fruit of another - A NC home seller tries to sell the property to somebody else.

A home buyer enters into a contract to buy an MLS listing.

The seller’s listing agent calls to inform the buyer’s agent that the seller has entered into a contract to sell the property to a different buyer, and is apparently taking the position that the contract isn’t binding - - for some reason that wasn’t shared.

Can the seller get away with this? What should the buyer do?

ANSWER: Even if a buyer (Buyer #1) has a real estate sales contract with a seller, it is possible under North Carolina law for a second buyer (“Buyer #2”) to end up with title to the property, if a deed to Buyer #2 is executed and filed.

In such a case, Buyer #1 would have a claim for breach of contract against the seller and would be entitled to recover any damages they incurred as a result of the seller’s breach. However, Buyer #1 wouldn’t have any claim to the property itself.

So what can Buyer #1 do?

If Buyer #1 really wants the property, and the seller is unwilling to perform their contract with Buyer #1, they should consider hiring an attorney to file suit against the seller for specific performance of the contract, and also file a notice of lis pendens (which means “pending suit”). See NC General Statutes § 1-116.

Once a lis pendens is filed, Buyer #2 would be “bound by all proceedings…to the same extent as if [they] were made a party to the action.” See NC General Statutes § 1-118.

What that means is that if a court ultimately determines that Buyer #1 is entitled to specific performance of their contract, Buyer #1 would end up with the property and Buyer #2 would probably have a claim against the seller for breach of contract.

Practically speaking, the filing of a notice of lis pendens would make it difficult for the seller and Buyer #2 to close on their contract because the existence of the lis pendens notice would be a cloud on title that would make it difficult, if not impossible, for Buyer #2 to obtain title insurance on the property and/or get a loan.

What happens if a home seller who is under contract dies before closing?

The scenario: A seller dies unexpectedly just a few days before the agreed-upon Settlement Date. Her daughter says she has already initiated the probate process.

The buyer’s closing attorney informs the listing agent that if the executor is unable to close the transaction within seven days of the Settlement Date, the buyer will be entitled to damages for the seller’s breach.

Is that correct?

It is.

The first thing to remember is that the contract signed by the seller client remains binding. Paragraph 17 of Standard Form 2-T states as follows:

“This Contract shall be binding upon and shall inure to the benefit of Buyer and Seller and their respective heirs, successors and assigns.” This language obligates the Seller’s heirs and the personal representative of her estate to honor all of the Seller’s contractual obligations, including the obligation to complete the purchase in a timely fashion.

There is also a North Carolina General Statute that supports this.

There are a lot of hurdles to clear to make this all happen which would almost certainly be longer than 7 days.

If the buyer is unwilling to accept a longer period of delay, the buyer has the right to terminate the contract based on the Seller’s breach.

If the buyer exercises that option, the buyer would be entitled to all of the remedies outlined in paragraph 23(b) of the contract including return of the Earnest Money Deposit and the Due Diligence Fee and reimbursement of the buyer’s “Due Diligence Costs.”

Lien on me - Who has to pay off a lien on a fixture during a home closing settlement?

A buyer is closing on a property in two days, and they learn that the water heater is leased and not owned by the seller. The seller is claiming that the buyer needs to assume the lease and the lien on the unit.

The water heater was not mentioned in paragraph 2 of the Offer to Purchase and Contract (Form 2-T) at all.

Is the buyer obligated to assume this loan, or does the seller need to pay off the lien as part of the sale?

ANSWER: The seller will have to satisfy the lien or risk being in breach.

Paragraph 2(a) in Form 2-T clearly states that “ALL EXISTING FIXTURES ARE INCLUDED IN THE SALE AS PART OF THE PURCHASE PRICE, FREE OF LIENS, UNLESS EXCLUDED IN SUBPARAGRAPHS (d) OR (e).”

Paragraph 2(d) permits the parties to state which fixtures are leased or not owned and exclude those items from the sale.

Paragraph 2(e) is a catchall that allows the parties to exclude any other fixtures from the sale, regardless of whether such items are leased or have a lien.

In this case, the water heater is clearly a fixture under both paragraphs 2(a) and 2(b) in Form 2-T.

Since the water heater is a fixture and was not excluded by the parties in either paragraphs 2(d) or 2(e), the standard form language requires the seller to convey the water heater free of liens to the buyer.

If the seller does not, then the seller risks being in breach of contract.

Why won't a home sell?

Why won’t a home sell?

If a home isn’t selling - what’s the likely primary cause? Price

You may think it’s not selling because:

it’s run down,

there are structural issues,

it’s out of date,

it has strange wallpaper or wall colors,

it’s near a highway or other loud noise source, etc.

but ultimately, it’s because the price doesn’t match the circumstances or condition of the home.

A home could be in great condition in the latest style with top-of-the-line materials and amenities, and in a beautiful neighborhood, but if it’s priced too high, it could end up sitting on the market.

No matter how good the marketing is for a property, it’s not likely to overcome an overpriced home

Buyers don’t want to overpay.

Price is primarily determined by what comparable nearby homes have recently sold for. Not by what a seller has paid for it, or how much they’ve spent on improvements.

It’s something that should be researched thoroughly. If a home is priced too high it could likely sit on the market, and the seller could ultimately get less than if they would have started with a fair price to begin with.

In the words of the great western philosopher, Billy Joel:

Get it right the first time, that’s the main thing.

You get it right the next time, that’s not the same thing

How accurate are Zillow Zestimates and other automated home valuation estimates?

According to a web article I found published by Zillow, the nationwide median error rate for the Zestimate for on-market homes is 2.4%, while the Zestimate for off-market homes has a median error rate of 7.49%. The Zestimate’s accuracy depends on the availability of data in a home’s area.

The Zestimate is an automated estimate. Automated estimates generally compare a home to other nearby comparable homes in some systematic manner.

They’re worth looking at. Before I show a home, I normally check the Zestimate, Realtor.com, and a couple automated ones that are available to realtors.

Generally, the more homogenous a home is, the more accurate the automated estimate should be. If it’s a relatively new home in fairly good condition in an area with several comparable homes - - especially if it’s in a large subdivision - - then the estimate of potential selling price should be decent.

The more you add differentiating factors, the less accurate estimated home selling price should be. For example: the age and condition of the home, additional land, outbuildings, additional unique amenities, furnished basements, if it’s in a rural area, etc. All of these could contribute to an automated estimate being less accurate.

BUT, those same factors would cause a good differentiation among human appraisers.

Ultimately it’s a subjective process whether or not it’s Zillow or a human appraiser. Looking at the automated estimates gives a home buyer more information to help them make the most informed decision about what they should offer for a property.

Is a Home Buyer Trying to Pull a Fast One on the Seller?

Is a Home Buyer Trying to Pull a Fast One on the Seller?

Can an addendum be part of a contract if it’s not submitted with the offer?

Let’s go over an example.

An offer is made that includes a Seller Possession After Closing Agreement (Form2A8-T). Following some informal negotiations on the Due Diligence Fee and Settlement Date, the buyer agent resubmits a revised offer the next day.

In the revised offer, Paragraph 14 identifies Form 2A8-T as a part of the offer, but a newly-signed Form 2A8-T is not sent with the offer.

The seller signs the revised offer and the Form 2A8-T that had been submitted with the original offer, and sends the signed documents to the buyer agent.

Now, more than two weeks after being under contract, the buyer claims that the Seller Possession After Closing Agreement is not part of the contract because it was not resigned and submitted with the revised offer.

In the view of the NC Association of Realtors, and myself, the Seller Possession After Closing Agreement IS a part of the contract because the conduct of both parties tends to indicate that they intended it to be a part of their contract.

In signing and returning the revised offer and the Form 2A8-T to the buyer agent, the seller’s intent to make the Seller Possession After Closing Agreement a part of the contract is clear.

How about the intent of the buyer? Although the fact that a newly signed and dated Form 2A8-T was not submitted with the revised offer is arguably some evidence that the buyer didn’t intend to make the Seller Possession After Closing Agreement part of the revised offer, it seems to be significantly outweighed by the following:

1) the buyer signed the Form 2A8-T with the original offer;

2) it was identified in the buyer’s revised offer as being a part of that offer; and

3) the buyer did not dispute that it wasn’t apart of the parties’ contract until well after it had been signed by the seller and returned to the buyer’s agent along with the signed offer.

Having said all that, it probably would have been best to avoid confusion by having the addendum updated and signed on the same date as the revised offer.

Can a home buyer assign their offer to another party?

Paragraph 15 of the standard offer to purchase 2-T states that the contract to puchase a home may not be assigned without the written consent of all parties except in the case of a tax-deferred exchange.

There is no standard form to handle this because it is fairly complicated from a legal perspective.

One issue to be addressed is whether the party whose rights are being assigned (called the assignor) will continue to be liable under the contract if the person to whom the assignor’s rights are being assigned (called the assignee) does not perform. Unless the assignment agreement provides otherwise, the assignor will remain liable for the performance.

Assignors should consider including an indemnity provision in the assignment to protect themselves from further liability

Assignees should consider requesting that the assignor make representations that they indeed have full rights to make the assignment.

Assignees may also want a clause that states that they have the right to make an assignment to yet another assignee.

The bottom line is that assignments are complex legal transactions and should be handled by an experienced attorney.

For FHA or VA loans, are Additional Earnest Money Deposits refundable if a property doesn’t appraise?

If an appraisal comes in below the contract price when the buyer is pursuing an FHA or VA loan and the home buyer has agreed to pay an Earnest Money Deposit? Is that refundable?

Yes.

The FHA/VA Financing Addendum (Form 2A4-T) states that for both VA and FHA loans, a buyer shall not be obligated to complete the transaction or “incur any penalty” by “forfeiture of earnest money deposits or otherwise” unless the subject property meets the applicable appraisal amount.

For an FHA loan, the applicable appraisal amount is determined by an appraiser provided by the lender. For VA loans, the applicable appraisal amount is set by the Department of Veterans Affairs.

In either case, if the appraisal does not meet the appraisal requirements of Form 2A4-T, then a buyer can terminate the transaction and receive a refund of their “earnest money deposits,” even if the termination occurs after the expiration of the Due Diligence Period.

They will however lose their due diligence deposit.

To avoid a termination of the offer, the buyer can try to renegotiate with the seller.

Can a home seller advertise a room as a bedroom even though it does not have a closet?

Can a room be advertised as a ‘bedroom’ if it doesn’t have a closet??

There are very few hard and fast rules for determining whether a room can be advertised as a bedroom. NC law and Realtor Ethics demand that realtors are honest, truthful, and accurate in their advertising.

They do specifically note that the absence of a closet is NOT a determining factor.

Common sense should prevail. There are a couple of hard and fast rules in specific circumstances.

If a home has a septic tank, you can’t advertise more bedrooms than is on the septic tank certificate.

The North Carolina Residential Building Code has a provision that requires every “sleeping room” to have at least one operable emergency escape and rescue opening. If there’s no escape or rescue opening, it can’t be advertised as a bedroom.

Lastly, if there’s not enough room for common bedroom furniture, it shouldn’t be advertised as a bedroom.

Cybercrime / Wire Fraud is a growing potential threat in real estate

Cybercrime / Wire Fraud is a growing potential threat in real estate transactions. Criminals have hacked email accounts of real estate agents lenders, escrow agents, closing attorneys, etc - - anyone involved in the transactions.

Here are a couple of examples from the news:

From the Samford Advocate:

A Samford resident was trying to buy a home through a real estate agent, but a criminal had somehow infiltrated their email conversation and tricked the resident into wiring $426,000 to a fraudulent account.

Luckily in this case, the funds involved were frozen and recovered by the victim within days - but they could have lost over $400,000.

In Chicago:

A buyer was prepared to pay a $40,000 down payment on a home. They spoke with a paralegal for the transaction, who said they'd send the wire instructions the following week.

But that same day, the buyer got an email from who they thought was the same paralegal. The email said the money needed to be wired sooner than expected. It included the correct down payment amount, address of the new home, and her mortgage commitment document.

The buyer went to the bank and sent the $40,000.

The following Monday, the home buyer got a call from the attorney's paralegal asking about the down payment of the home. The buyer said they’d already sent it according to the email, and the paralegal said - - what email, I didn't send any email.

After taking a closer look at the email, the buyer realized the sender's address was similar to the paralegal's, but had two extra letters added to it.

They lost their down payment that they had saved for years for.

Using email, hackers have used fraudulent wiring instructions to direct parties to wire funds to the criminals' bank accounts, often to off-shore accounts, with little chance of recovery.

It also appears that some hackers have provided false phone numbers for verifying the wiring instructions.

In those cases, the buyers called the number provided to confirm the instructions, and then unwittingly authorized a transfer to somewhere other than the escrow agent.

Sellers also have had their sales proceeds taken through similar schemes.

So let’s go over some things to be aware of to avoid being a victim:

A real estate agent should never send wiring instructions to you by e-mail. In most cases, they won’t do it at all. Instructions should come from the lender or closing attorney. Be skeptical if this happens.

Get the phone number of the closing attorney or escrow agent at the beginning of the transactions. Confirm it independently by doing an internet search on the attorney's office. Call and talk to them.

Always call the verified number to orally confirm wire instructions. Be alert for the smallest change to anything you received by email. Confirm the bank routing number, account numbers and other codes before taking steps to transfer the funds.

Avoid sending sensitive personal information in emails or texts. Provide such information in person or over the telephone directly to the Escrow Officer.

If you haven’t done it already, take steps to secure the system you’re using with your email account. These steps include creating strong passwords and using secure WiFi as well as two-step verification

processes.

If an email or a telephone call seems suspicious refrain from taking any action until the communication has been independently verified. Promptly notify your bank, your real estate agent and the Escrow Officer.

Be Alert. Be skeptical. Be aware.

If a home buyer doesn’t pay the due diligence fee, can a seller deny access to a home for inspection?

A home seller accepts an offer with a substantial due diligence fee. In North Carolina, due diligence fees are due on the effective date of the contract. Despite several reminders to the buyer’s agent, the fee has not yet been delivered.

The buyer’s agent calls to arrange a home inspection. The sellers don’t want to allow that inspection until the due diligence fee is paid. Assuming that the standard offer to purchase 2-T was used, do the sellers have the right under the terms of the contract to refuse access to their property until the due diligence fee is paid?

The answer: No.

At this point, the terms of the contract are binding on both parties

While one of the obligations of the buyer is to pay the due diligence when the contract becomes effective, one of the obligations of the seller is to provide reasonable access to the property - - it is not conditioned on receiving the due diligence fee first.

That said, with regard to the due diligence fee, if the buyer does not pay on time, the seller does have remedies available.

The seller may deliver a written notice to the buyer demanding payment of the fee within one banking day.

If the buyer does not deliver the funds in a timely manner, the Seller shall have the right to terminate this Contract upon written notice to the Buyer, AND the Seller will still be entitled to recover the Due Diligence Fee, and pursue other remedies outlined in paragraph 1d).

So if you’re a buyer, it would be best not to mess around with delivering the due diligence fee.

Should a Tonal Home Gym Convey to Buyer??

There was a circumstance where on a recent final walkthrough, a home buyer noticed that a Tonal Home Gym in the bonus room was missing. It was pictured in the MLS listing and stayed in the home the entire time they were under contract. Now the wall is patched but badly scarred.

Is the seller in breach of contract for removing the home gym? Maybe.

There are basically two ways to determine if the gym is a ‘fixture’ that should convey. 1) There is a list on the Offer to Purchase form 2-T in paragraph 2a); and 2) NC state law controls what a fixture is.

NC state law uses the Total Circumstances Test to determine whether an attachment is a fixture and therefore part of the land. The test examines four factors:

(1) the intention of the person installing the attachment;

(2) the permanent or temporary nature of the attachment;

(3) the way the property was adapted to accommodate the attachment; and

(4) the relationship of the person installing the attachment.

Home gyms are not listed as a fixture in paragraph 2a)

With regard to NC state law, both the buyer and seller would be able to make a case, and they might have to go to arbitration or court to decide.

Best practice is to make clear exactly what conveys before the offer is even made to avoid surprises.

The home does need to be in the same condition at closing as it was when the offer was made, so the seller would probably need to repair the scarred walls.

Is the home seller responsible if the HVAC breaks down before closing?

In this example, a home buyer discovered during their final walk-through that the HVAC system wasn’t working properly. After inspection, it looks like it will take $6,000 to repair.

The buyer is demanding a refund of their $10,000 Due Diligence Fee, Earnest Money Deposit, AND Due Diligence Costs (inspection,appraisal, etc.) based on the seller’s breach of the contract for failing to keep the property in the same condition as it was on the date of the offer.

In this instance, if the seller doesn’t make the repairs, the buyer is entitled to get their due diligence fee and earnest money deposit back, but not the due diligence costs.

Paragraph 11 of offer to purchase form 2-T addresses this. The seller is not in breach of contract, but paragraph 11 gives the buyer the right to terminate the contract and get their due diligence fee and earnest money deposit back, but not the due diligence costs.

If the Buyer does NOT elect to terminate this Contract the buyer would have the right to the proceeds of any insurance claim filed by Seller on account of any damage or destruction to the Property.

Lastly, if the seller wants the deal to go through, they have to be given the opportunity to repair the HVAC unit, and if they do, the buyer couldn’t terminate the contract without losing their deposits

What are buyer rights under form 2-T if they can’t sell their existing property?

In North Carolina, if the Offer to Purchase and Contract (Form 2-T) is used to make an offer on a home, in paragraph 5b), there is a place for the buyer to indicate whether or not they do or do not need to sell an existing property in order to buy the property they are making an offer on.

If the buyer indicates on the offer that they need to sell their property first - - and then they can’t, can they terminate the offer and get their earnest money deposit back?

No. They cannot. It is spelled out later on in paragraph 5b, and also in paragraph 4c).

So if paragraph 5b) does not create a contingency for the buyer to get their deposit back, why is it in the contract? It’s there primarily to enable the seller to better assess the strength of the buyer’s offer. It adds some transparency to the offer.

To avoid losing their earnest money deposit, the buyer should try to sell their home before the end of the due diligence period, or at least be reasonably sure they can sell their existing home before the settlement date.

If they can’t, the buyer would be in breach of contract and the seller could terminate and collect the earnest money as a remedy.

Now having said all that, if both the buyer and seller want to make the offer contingent on the sale of the home, they still can. They just need to get an attorney to draft a custom addendum to supplement the standard form 2-T.

A low home appraisal could cause a buyer to lose their deposit

When someone uses a loan to help them buy a home, the lender will send an appraiser to estimate the value of the home.

The lender won’t loan more than the amount of the appraisal.

If the appraisal amount is less than what the home buyer has offered, it could cause potential trouble.

For example, if the buyer’s accepted offer for the home is $300,000, and the appraisal amount is $280,000, the buyer will have to pay an additional $20,000 in cash out of pocket, in addition to the down payment and closing costs they were already planning to pay for.

If they don’t have the additional cash, they won’t be able to complete the transaction. They’ll lose the due diligence fee they paid, and depending on timing, possibly their earnest money deposit and any inspection or bank fees they’ve already incurred.

To complicate things further, appraisals are subjective. 3 different appraisers could come up with 3 very different appraisals for the same home.

BEFORE you make an offer on a home, make sure your realtor performs a comparative market analysis of recently sold comparable homes so you have an idea of what a property will appraise for. Have them show it to you and review it with you.

A realtor will not be able to guarantee that your home will appraise for what you offer, but they could give you a better feel for the overall risks.

Let me give you 3 examples that I often see when I perform an analysis.

One, there might be several nearby homes that sold for comparable amounts, or even a bit more. In this instance, the appraisal risk would be lower.

Two, there could be 3 or 4 recently sold homes that would support a buyers proposed offer amount, but 3 or 4 that are lower. It may seem to you that the 3 or 4 that support the offer amount are the most comparable, but there is no guarantee that the appraiser will select those properties.

Three, there could be only 1 or 2 recently sold homes that support the offer price, or maybe even none. In this situation, the risk is obviously higher. I’ve been in similar situations and had it work out, but I was really nervous about it.

The key is to match your financial situation and your appetite for bidding over the potential appraised the value with the results of the comparative market analysis.

If you don’t have flexibility with the amount of cash you can put down, it may be a good idea to avoid making an offer on a home that is not supported by multiple recently sold comparable homes.

I have a background in finance, so I normally go pretty in-depth when I do an analysis.

If you're looking to buy a home, I’d love to help you. If you’re looking to sell, this same sort of analysis will help you to set the right price, so I’d love to help you as well.

I primarily serve the areas around Winston-Salem, NC and all the way west to the area around Elkin. I’d love to hear from you.

56% of NC Triad Homes Closed Above List Price

For closings in the NC Triad MLS, over the 30 period ending on September 11, 2023, 56% of homes closed above list price if they went under contract the first weekend they were listed. A decrease from the prior month, which was of 62%. 17% closed at list price, and 27% closed below.

For closings that went under contract AFTER the first weekend (on the market for 6 days or more), only 15% closed above list price, and 77% closed below list.

If you are interested in making an offer on a home the first weekend it is listed, and it has had a lot of interest and multiple offers have been made, it’s more likely than not that it will end up closing above list price.

If you focus your search on homes that are still on the market after the first weekend they are listed, you have a better chance of getting an offer that is below list price accepted.

2016 was the last time the real estate market was balanced between buyers and sellers

Winston-Salem Triad Area August 2023 Home Sale Results

To understand the current real estate market, it’s helpful to look at it from a long-range view. The data under review is for the Triad MLS which includes areas around Winston-Salem and Greensboro as well as areas westward to include Davie, Yadkin, Surry, and Wilkes counties.

Looking back, closings don’t fluctuate tremendously. In 2023, there were 2,002 closings. In 2006, there were 2007 closings. The market crash occurred in 2008, and there was a fairly significant drop in sales. From that point on closings gradually increased until dipping back down in 2022.

The bigger story is in ‘homes available for sale’ (Inventory). In 2008, there were over 14,700 homes available for sale, and they have been decreasing steadily to only a little over 3,000 in August of 2023.

Related to that is ‘months supply of inventory’, which is the theoretical number of months it would take to sell the current inventory. In a market that is balanced between buyers and sellers, there would be 5 to 6 months supply of inventory. In 2008, there was 11.4 months of inventory. The market heavily favored buyers. It kept going down until 2016, which was the last time the market was balanced.

From that point on inventory, months-supply-of-inventory, and correspondingly - ‘days on market’ all decreased steadily to put the current market heavily in favor of sellers. Prices have quite naturally gone up steadily since the last balanced market in 2016.

With inventory at bare bottom levels, it’s highly unlikely that we will see a market crash. If anything changes in favor of buyers, it will be more likely to be a gradual easing. It seems likely that the real estate market will be weighted in favor of sellers for the next few years at least.

August Winston-Salem Triad Residential Home Sale Report

Winston-Salem Triad Area August 2023 Home Sale Results

August 2023 closings of just over 2,000 homes were higher than the prior month, which is not unusual because real estate is seasonal and there is normally an increase in closings from July to August.

Closings were less than the prior year, however. This makes the 19th straight month that current month closings were lower than the prior year.

Are closings low because demand is low and people aren’t buying homes? Definitely not.

Demand is still high, but there's very little inventory for sale. There were a little over 3,000 homes for sale at the end of August. Month’s supply of inventory at the end of August was 1.8. Months supply of inventory is the theoretical number of months it would take to sell the inventory on hand.

A market balanced between buyers and sellers would have 5 to 6 months of inventory, which would be about 10,000 homes on the market.

That signals that the market will likely favor sellers for at least the next few years.

(Coverage area includes areas around Winston-Salem, Greensboro, and all the west to Elkin and Wilkesboro)