In Bidding Wars, All-Cash Offers More Likely to Come Out on Top

All-cash offers are four times more likely than their counterparts to win in a bidding war.

According to Redfin, all-cash offers were the winner in 2021, increasing an offer’s success against competition by a whopping 334%. Waiving the finance contingency increased the likelihood of success to buyers in a bidding war by 31%, while conducting a pre-inspection helped buyers in a bidding war by 25%. The report found that both waiving the inspection contingency and adding an escalation clause offered no significant benefits to buyers against their competition, most likely because they were so commonplace in 2021, they did not make the offer stand out.

It remains to be seen what strategies will be most effective in 2022, but bidding wars are showing no sign of slowing down. In 2021, at least half of offers in the study had competition, ending the year with 67.7% of homes in December and it continues to be a strong market for sellers. According to the report, in January 2022, 70% of homes on the market faced competition, the most competitive on record. While that may slow down as the year progresses and if more inventory comes on the market, it is still most likely that there will be competition among buyers throughout the year.

In 2021 more than 30% of homes sold for above asking price and that trend is continuing into 2022. In February, 43% of homes sold for above asking, with the average home selling for 0.5% over its asking price. The median home price also rose 15% year over year and 32% from 2020.