I haven't seen the property and you already have an agent so unfortunately I can't offer much advice on this. What I can say is that if I were looking at buying this property I would want to see comps that support such an offer and make sure that the price point fits with my exit plan goals.
Lance King/Owner-Managing Broker
To better comprehend the dynamics of what causes this sort of blind follower mentality, consider the definition of an auction.
"Auction is where a single item is offered for sale. Bidding starts with a low price, and is raised incrementally as progressively higher bids are solicited, until either the auction is closed or no higher bids are received. Often the seller sets a reserve price below which the item is not sold and the auction is aborted. Perhaps the most common form of auction, it allows a seller to secure the highest price for an item."
Now then, in many communities throughout San Francisco, e.g., Noe Valley, Bernal Heights, some parts of Excelsior, Glen Park, SOMA, to name a few, you'll find some agents and certainly many sellers who believe they can command the price they want without regards to a supportable basis. However, any informed buyer will simply not play by those artificial and biased (towards the seller, of course) rules, waiting instead for a better time, or looking for a better place, and certainly doing a lot of homework before calling a spade a spade. Sites like Trulia may give you a snapshot of the market and its trends, but only through careful study of what has been happening, asking the right people, besides your agent, will you come to understand where you stand in regards to any house and what you may be prepared to offer for it. After all, it really is about supply and demand, and as such, there will always be someone who may have the means and sees something in the offering that compels them to pay considerably more than the better judgment would dictate.
How you establish your maximums and a basis for what you're willing to pay for any given house in any given area will be premised on a couple of important factors: 1) your financial ability to pay; in other words, how much you're pre-approved for through your lender; and 2) your caprice. If you just got to have it at all cost, then you'll be willing to pay as much as is necessary to win the auction.
Speaking of which, and on a slightly different item, a classic car auction, I once witnessed one so-called investor pay as much as $1,200,000 for a 1967 Cobra, the original list price for this car new was $4675 when it first went on the market! So, to paraphrase a sage of our times Forest Gump, "...crazy is as crazy does..."
Hope that helps, otherwise, email me and we can discuss this and other related things further.
Buyer clients of mine wrote an offer on a short sale property recently that was listed at around $75,000 below the actual likely value of the home. We determined a fair price, and our offer was accepted amidst six others. So it's really important not to get sucked in by list price.