The current seller's market has surprises, however, when we receive multiple offers over list price, regardless of whether the property is priced higher or lower than what the CMA indicates is the market value.
List price is all part of the pricing strategy -- some agents list less than market value in order to stimulate a bidding situation. But from a buyer's point a view, list price should NOT be the sole basis of the offer.
Take a look at this blog about "Why was my offer rejected although it was higher than list price"
Buyers who track the progress of sold properties on which they submitted offers are very surprised when they found out they wrote higher offers but lost anyway.
Overpricing --- is still the number one reason why a property won't sell. So we are caution not to do that.
Underpricing --- by how much? Just a tad under the market value will ensure that we generate enough interest to get an offer. By a lot will definitely attract a lot of interest.
But do you, as a seller, really want to look at over 30 offers just so you will have bragging rights to say you received that many offers? Won't analyzing the right offers be a better use of your time?
Overbidding ---- What buyers and their agents are careful about is how much higher should they write their offer, especially if the buyer needs to get a loan, and as such the property needs to appraise for what the buyer is offering.
Pricing is definitely a critical action item when selling a home, and one that warrants an in-depth discussion.
How may I help?
The short answer to the question is yes - this is a common practice these days in the Bay Area. It can be frustrating and make purchasing a home difficult,
The best way to determine the value of a home is to contact a local realtor who can do a market analysis on the home and find out more details about the interest in a specific property so that you can make an informed decision when deciding how much to offer.
Yes, the listing agents job is to discuss with the seller what is most likely to get them the highest possible price.
The list price in many cases is just a stake in the ground in a changing market.
Try to stay as objective and unfazed as possible by the current overbidding. It's very hard
to stay in the market and get a house if this really bothers you.
At some point the market will level out and the list to sale prices will move closer together. We're already seeing some of this.
For agents receiving 60 requests for disclosures and 30 offers it is very time consuming and many will try to price more inline with the market shift!
Yes there are some realtors that do recommend to their clients to list their homes below market value to generate interest and with the hope of generating multiple offers. That has always been the case. This is not awlays the case across the board and there are several factors that do play into the level of interest of a particular property and ultimately the sales price.
Right now pricing properties can be a bit of a challenge. The market has shifted significantly over the last 6 months with a drastric reduction in inventory and and increase in interest. Interest rates being historically low and a general improvement of the local economy has prompted this. In addition many who are renting are finding that they can purchase a home and have mortgage payments close to thier rental payments.
Whenever the market does shift, pricing can be more challenging. If looking at comparables that recently sold, you may not see what the current value of a particular property could potentially be. Condition of the property, location and ease of access can also affect the level of interest.
So as you can see there can be many factors that determine value. Value is always set by buyers and what they are willing to pay for a property. During a market like this, buyers are willing to pay more.
Hope this helps answer your questions.
Alain Pinel Realtors