Asking price or marketing price is never a percentage of market value. You the buyer will set the value of the property when you make your offer.
When the market was really crazy and we'd get 40 offers for a property to win I'd tell my clients to offer what they thought it was worth to them. Pick a number that they could live with if they got it. If they wern't the winning bid they needed to be comfortable with what they offered. In othere owrds they would not have wanted it if they had to pay more.
Your agent can help you by getting information and if they don't know how to do that then too bad, wrong agent. Comparable prices for recent sales can help but only so far as to tell you what everyone else sees. Knowing what your competition is can help, but again only so far.
My observation of the market right now is that sometime the buyers are not coming out to play against each other anymore. I've heard of many properties with offer dates that had up to ten packages out an were expected to generate multiple offers but when the day came it went with no offers. Buyer's agents repeort that the client didn't want to compete.
There are other thinigs that can be done that involve selling you as the best buyer. It doesn't always mean money. Sometimes the best buyer is the one that will close and isn't the highest price.
There is no magic formula to use when pricing. In today's market pricing is more art than science on both ends, and bidding over asking price can be a really bad idea unless you are prepared to lose money on resale or stay there for the rest of your life.
Pricing is all over the place right now, not in small part because of sellers who are unrealistic about pricing and agents/brokers who are unable or unwilling to get them to reality. What this means to you as a buyer is that some asking prices are set low to create interest, some high to allow for negotiations/price reductions, and everything in between.
Also remember that the highest price is not always the determining factor. There was one property we had some buyers for that we found out it was really important to the sellers that a family bought the house, so we brought the husband, wife, and their new twins around to see the property when the owner was there. Their bid won in large part because we addressed the seller's emotional need. There are a number of other factors that determine which offers get accept such as the agent/broker's presentation of the offer, ability to present you as the best choice, and making sure you have an approval from a credible lender (out of area lenders is a major reason we will advise to choose one buyer over another).
What you need is a good agent/Broker who has experience to know what things should sell for, knows how to find out as much information as possible to hone in on how many offers might come in and where they are on pricing, and how to do all the things mentioned above. Part of our program when advising buyer clients is also to discuss your exit plan if things change in your life so you don't get stuck somewhere you no longer want or can afford to be.
From your question it would seem you don't have an agent/broker yet. My best advice to you is if that is true is to find the best one you can. We are always ready to go to war for our clients and can deliver the goods, and there are many other reputable expereince agents/broker who regularly contribute here as well.
Lance King/Managing Broker
Sine I asked the question, the bids are going out this week. There have been 15 requests for packets of disclosure, and my relator told me to bid up to 750K in order to secure it. In this economy are people really bidding up to 200 K over the asking price?
I'm wondering how many buyers like yourself who post questions on Bid Strategy are working with agents who don't know the area? I certainly understand the desire of DIY (Do-It-Yourself) buyers or those who sign up with Clicks & Tricks agencies who send stats and contracts to save a buck or two. You need to ask yourself what the saving might be when you can't complete the transaction? Honestly, if you don't trust your agent's advice - You should ask yourself why you are working with them?
Ask a competent agent who knows the area, viewing many homes each. Many local SF agents are online and know Bernal very well, viewing almost every Sunday and Tuesday. Please feel free to give Eileen, Jed, Rob, Cheryl etc. or even myself a call. However If you've already signed a Broker Agent agreement - We CANNOT interfere, advise or otherwise. *(You'd have to fire your current agent first.)
Wish you much luck! Check out the link for some good neighborhood stats!
Mike Ackerman, CRS
Zephyr Real Estate - 24th Street Office
Besides looking at comparables in the area and with the information gathered from the sellers agent, you can get a determination as to where you should be with your offer.
There is no set amount up or down you should go because every transaction is different but gathering information is key plus many times it is how the offer is written.
Let me know if I can be of help.
If you are working with a Realtor these are questions that he/she can guide you with. If not, then where to come in with your offer price really depends on the comps & where you feel the value is.
There is always the possibility of over bidding and getting the property vs. losing the property over stronger offers. I leave it up to my clients to make the final decision as to where they want to come in at when we are dealing with a multiple offer situation after weâ€™ve reviewed comps (comparable sales), disclosures, pest report, etc.
Strength of an offer isnâ€™t always just based on offer price; inspection & loan contingency time frames as well as type of loan and down payment amount also can play a role.
Seller motivation can also come into play. Iâ€™ve had buyers who came in slightly lower than higher & stronger down payment offers selected as a result of including a personal intro letter to the seller.
Lots of variables to consider which an experienced agent will help you with.
Cheryl Bower, Realtor , GRI, ABR
Zephyr Real Estate
Does the property you are interested in happen to be on Bonview Ave? If so, the listing agent happens to be an agent in my office and I am very familiar with it. This particular property is a probate sale and there are some unique strategies that you can employ.
As for a bidding strategy. Like everyone has mentioned, there is no set answer. Do remember, that the home is most likely going to sell for the market value. If a particular buyer puts in an offer above asking price and has a financing contingency, there is a possibility that the appraisal will be below the offer price and prevent a loan acceptance at that price.
Feel free to contact me at email@example.com or call 415 728 5580 if you would like to discuss.
Prudential CA Realty
One Daniel Burnham Ct. #260C
San Francisco, CA 94109
Though, there are no longer bidding wars in which a $575k home sells for $675k, unless it's grossly underpriced in order to attract a bidding war and a $675k price.
I would have your agent look for recently sold homes in the area and put together an intelligent offer. If it's truly your dream home and you'd be maddened at the thought of someone else purchasing it, maybe go 2% above what you and your agent think will be the highest bid.
But remember, it's not always the highest bid that wins. It's generally the strongest, in this market. Meaning, make sure your financing is set up, your cover letter is well drafted, and your make it clear that your intention is to follow through with the transaction, assuming the home checks out to your satisfaction during the contingency period.
I wouldn't advise going crazy, and keep in mind if this home doesn't work, there will be others, and the next one may even be less expensive, better equipped, and you may be happy this one did not pan out. Nonetheless, work with your agent to find out.
There is no standard or ideal percentage. Each real estate transaction is unique and is based upon many factors, such as the location, the market conditions, the home's condition, the amount of interest others show in the property, etc., etc.
All the best, good luck, and congrats on finding a home that will work for you. I truly hope it's becomes a reality for you!
I understand your situation. I have been there, done that, lost it to a higher bitter, and quess what I ended up with my dream house. If you are not in a bitting war situation pay the asking price and lock in with a strong offer. Higher a Realtor that can assist you and guide you through this process. Find a Realtor that is familiar in the area you are interested and let their expertise work for you. Best of luck and hope it all goes well.
How much you offer depends on many variables; it sometimes does not mean bidding way over asking. I live about five-minutes away from the area you are mentioning, so please contact me if you'd like to talk further. Getting random advice from multiple agents on Trulia may not be your best bet in this situation. You need to have your agent find out the key information for the particular property, and go from there. Best wishes.--Eileen
TRI Coldwell Banker, SF's #1 Office