Multiple offers?
In the current market houses that range from $425-500K are getting multiple offers.
If you are pre-approved and ready to make offers, and are just waiting for the one house that tells you “I’m the one you want”, there are currently lots of houses on the market in this range, and many have been sitting there for months. You may have been through dozens of houses, or just a few, but none of them has been quite the right thing. Today your realtor has taken you to one house that just had a dramatic price drop. It just went from $450K to $399K or in some cases even $350K. Why? You may wonder why–has it finally come down to it’s real value?
This may be a marketing strategy that allows this home to stand out from the relative abundance of homes available in this price range.
So you go– and it’s a great house, in fact, it’s prettier and shinier than many of the houses you’ve been to over the last few weeks. Clean, charming, just the right layout, very cool! But WHY is it $399k? There’s a window of pricing that causes buyers to line up for affordable housing and these homes often receive multiple offers.
Here’s what’s happening out there now in Seattle and some other markets. There are some listing agents who along with their sellers are willing to take a risk. They know that the house they are selling is worth $450k, in fact they have an appraisal from the end of 2008 showing a value over $450k. And they are gambling that if they drop the price under the $400K threshhold, that they could very well stir up a bit of a feeding frenzy, multiple offers and a sale over the asking price. It’s happening all over Seattle. Many of the homes priced this aggressively are bank owned homes, and we’ve seen a high percentage priced at, say $250K end up selling for $10K-$100K over the list price.
Naturally there will be some fallout, some buyers will be disgusted with this strategy and tell their agent, “Pay over list in THIS market, NO way!” But we see it every day, that this market is in flux, changing all the time. It’s a fascinating and sometimes frustrating time. You may experience it as frustrating, and while we understand your frustration, we also find it fascinating. In this way listing agents open the door to a great or at least better-than-average deal on a home a buyer might not otherwise be able to afford. The trick for the buyer is not to fall in love with the home and cut bait if the seller/seller’s agent are unreasonable.
We may or may not have reached the bottom of the housing market. Realtors as a class can be very creative in their marketing, and Realtors and sellers are getting hungry and savvy enough to find ways to pique people’s interest.
Most of this kind of multiple offer situation is in the bank-owned arena. But sellers are catching on, realize that they are in competition with the bank owned homes too, and the ones that get tired of sitting or simply need a quick sale may want to employ this kind of strategy. Buyers need to be aware that just because it’s priced at $225k doesn’t mean that’s where it will sell. And if you want to be the buyer of such a property and you want to win, well, money does talk. You need someone that can negotiate hard among an array of sometimes dozens of other agents/buyers.
Buyers need to think about the price vs. the value as they decide what to offer, and also need to understand that there may only be one chance at it. Consider the other homes you have been looking at. This is the one that stood out to you–is it only because of price, or is it because it’s the right house, well kept, move in ready, in a great location. There’s value in that! Others see the value as well, and even with lots of houses on the market, in our experience, the number of well-kept homes for sale right now is lower in proportion. People sell in the low ebb of a market when they have to, and lots of folks are in financial stress, which means that many homes for sale at what seems to be a relative bargain have not been kept up very well.
Most of this article has been about multiple offers and buying over the list price. There are plenty of sales where the final selling price is under list–the majority in fact. Statistics show that homes in the greater Seattle area sell on average at 3% under list price.
These are exciting times for real estate buyers.
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