How crazy is it out there (there being the residential real estate market, of course)?

It is wild, and as Kent McMillin, a successful – and busy – loan officer with Farmington Financial says, “Almost every potential buyer finds himself in a predicament.”

McMillin blames this on low interest rates and a lack of inventory.

This seller-friendly environment, McMillin says, has changed the way people purchase homes, adding it’s now the “norm for qualified buyers to find themselves in multiple offer situations resulting in escalation clauses, buyers waiving contingencies and quick closing dates in order to make their offers appeal to the sellers and win out over the other offers.”

The escalation clause that McMillin describes occurs when a buyer submits an offer for an amount over the highest offer the seller receives.

For example, if a house is listed for $400,000, and the listing agent receives multiple offers and alerts all the potential buyers of this occurrence, that agent may dictate that all of the prospects deliver their highest and best offers by a specified date and time.

In some cases, some of those buyers return with an escalation clause saying they will pay $5,000 over the best offer.

Some in the industry feel the escalation clause must include a cap – or maximum price – in order to be valid and enforceable.

Some worry sellers might get a friend to submit a ridiculously high offer with no intention of buying in order to drive the price.

In any case, it is a complicated process and, McMillin says, a condition increasingly prevalent in today’s market.

McMillin says he often has several real estate clients call and ask for pre-qualification letters on the same property, many with different prices.

One may consider offering $10,000 less than the list price (rookie mistake), some the list price and others $10,000 over.

When will it end? The stock answer is “I don’t have a crystal ball.”

I, on the other hand, just happened to have one.

Its name is Mylinda Vick, and she is a principal with Cherry and Associates, a commercial real estate and development firm specializing in tenant representation. Mylinda is one of the leading commercial brokers in the city and has been for years.

Commercial brokers are aware of businesses coming to town or expanding their current spaces.

Conversely, as was the case in 2007, they know when companies will be shuttering, leaving or contracting.

They have the inside scoop, and no one knows commercial real estate better than Mylinda Vick. I asked her for an overview:

“The commercial real estate market for office space in Nashville is growing more constrained, as over the past 12 months the vacancy rate for office space has declined over 3 percent and negotiations are going more in the landlords’ favor than the tenants.”

As McMillin noted, buyers are waiving contingencies in the residential real estate market.

In the commercial market, “concessions have been greatly reduced, as there is more competition for office space and not enough options,” Vick says.

How long could this last? “Currently, there is over 1.9 million square feet of office space under construction,” Vick says, noting “rates for new office buildings will be significantly higher due to cost of land and construction costs.”

And, she adds, current rates had risen by $2 per square in areas such as Franklin, Brentwood, Green Hills, West End and Music Row.

“Unless there is another economic downturn,” she says, “it should last another two years.”

I am with her on that.

Sale of the Week

Even with all of the hubbub in the market with downtown condominiums going for $585 per square foot and homes in Sylvan Park, 12South, Waverly Belmont, Belle Meade, Green Hills, Forest Hills, Oak Hill, Richland/Central, East Nashville and beyond selling for more than $200 per square foot, there are some sweet deals to be harvested.

A quick ride on the Good Ship Lollipop down Nolensville Road just past Old Hickory Boulevard could land a buyer in the Sugar Valley, a place with tangerine trees and marmalade skies.

Off Sugar Valley road is Sugar Hill Drive, and it is there Melissa DeMeno of Benchmark Realty delivered her buyer to 6720 Sugar Hill.

A confectioner’s delight with 2,400 square feet and a sweet-and-low price tag of $260,000 in a sticky transaction that had the seller paying $5,000 of the buyer’s closing costs.

Consequently, listing agent Kim Barrett raised the list price from $255,700 to $263,000 so that it would be worth the $260,000 sales price, which equaled the splendid original list price of $255,000, plus the $5,000 in seller paid closing costs for the final sales price of $260,000.

All of this finagling did not gum up the works. Even with the closing costs added and the price ‘grossed up,” as they say, the house, with its three bedrooms and two full baths, still sold for a reasonable $108 per square foot.

Barrett, who is with Celebration Homes, popped the cork after closing this house that she candidly described as a “super nice home in a great location featuring a nice layout with arched openings, vaulted ceilings, updated kitchen and baths with granite countertops.”

She later noted the private backyard had a two-tier deck and a privacy fence.

Be sure to brush after meals and before bed in order to avoid cavities.

Richard Courtney is a real estate broker with Christianson, Patterson, Courtney, and Associates and can be reached at [email protected].