Elena -- I've been in buyer's shoes in Palo Alto during last hot era. Given that all houses sell for way over asking, if a house is already priced near my budget, I'd imagine that the seller is secretly expecting a 20% higher price than the list price and I'd not make an offer. If the property sits on the market for so long, then as a buyer you'd start wondering if there is something wrong, and not make an offer at fair value -- you'd try to lowball. Often times, sellers balk at a lowball offer (in Palo Alto at least), and take time to respond. At the same time, it's a waste of buyer's time to write an offer package and wait on it while other properties come and go. All this leads to a property being shunned quickly if the price is not set properly.
I'm no professional but my experience is that if other houses are priced 20% below, you price yours too, because buyer pool *interpretes* prices a certain way.
When trying to decide what changes to make there are no simple rules. For one of my clients in Palo Alto I recently evaluated what adding a second bathroom would do for the expected sales price. For their 3 bedroom 1 bath home adding a second bath would add about $50,000 to their expected sales price. This would not hold true everywhere. This was specific to their neighborhood, the size of their home, and even the age.
There is a certain amount of luck in a home sale which mostly depends upon the economy. The bidding war is usually the result of a pricing strategy. It's effectiveness depends upon how many people the home appeals to, current buyer attitudes, and many other factors. It is more of a chosen marketing plan than any specific features of the house.
Although there is a strong seasonal change in the number of homes sold in Palo Alto, there is not a corresponding price change. See Palo Alto home sales prices and the number of Palo Alto home sales at http://julianalee.com/palo-alto/palo-alto-statistics.htm If you look carefully you will see that numbers peak in spring/summer but price peaks occur in any quarter.
If you are thinking of fixing up your home in order to sell it, focus on making it look like nothing needs to be done to move in and love the home. Beyond that talk to an experienced agent to get advice specific to your home.
Juliana Lee, MBA LLB
Top 2 agent nationwide at Keller Williams Realty
Over 30 years experience
Over 1,000 homes sold in Santa Clara and San Mateo Counties
At your service,
Certified Distressed Property Expert
This is done to encourage multiple bids, many of which will have no hope. However, the mere fact that well qualified Buyers know there will be multiple offers pushes them toward making a higher offer than would be the case if there was no competition.
This is how any auction works. The opening bid is always well below the anticipated sales prices.
Sometime in the near future this bubble will burst and we will have numerous law suits from Sellers who used this tactic and were then forced to accept the only bid received which is well below what their agent told them to expect. When you sign a Listing Agreement you are legally bound to sell for the list price if there are non higher.
It is absolutely not dumb luck. The biggest factor in selling over list price is what the list price is. The lower the price in relationship to market value, the higher percentage over list price. What we are seeing now in Palo Alto is that in Jan/Feb there were many more offers than there are now. 10-20 offers was common. Now it is more common to get 5-7 offers, but those offers are for the most part excellent, non contingent, and still over list price unless the list price is over market value. You will also see the higher market value for the most part the less over list price you will see. So, for homes under 2 million the percentage of offer price over list is generally higher than homes over 3.5 million.
That being said, there are things you can do to get more money for your home, whether you list low, at market, or over market.
1. Fresh paint
2. Good flooring/new carpet
3. Get rid of smells
4. Clean, colorful landscaping
5. Bathrooms that are not gross
6. Spotlessly clean house
Traditional wisdom is that kitchens and baths sell homes. However, I would think carefully and speak to real estate experts before remodeling a kitchen to sell. It really depends on what your kitchen currently looks like, and how much money you have to spend. Kitchen designs are currently in transition. IE, granite doesn't get you much any more, so that is a more complicated subject.
I have a section on my website: http://marcymoyer.com/selleradvicearticles that has a lot of my blogs on seller tips. You may find it helpful.
Keller Williams Realty Palo Alto