Sold over asking! Crazy amounts above the list price are the talk of every virtual water cooler these days. Can you believe that they sold their home for that much over asking? Why am I having such a hard time buying a home in my price range and keep getting out-bid?
If you have been pondering these questions, rest assured that you are not alone. Having had such a strong seller’s market, pricing has been rising and it is challenging to find a home in your price range. Especially if you are looking at the list price of what you can afford.
Traditionally a listing agent will price your home based on what other homes like yours have recently sold for in your area. This makes sense to everyone involved. Same type of home, same area, same sort of finishings, same time, the price should be very similar. That is still happening in some cases but more and more, agents are purposefully listing their client’s properties well under the anticipated sale price. Because there are so many buyers and less homes for sale, the lower price gets more traffic in the door and more interest and more calls to the listing agent. This means potentially more business for the agent in the future. It also can create a bidding war for the house with multiple people interested in it and many people offering a bid. More bids typically equates to a higher sale price. Then, once the house is sold, the agent can run around telling everybody what an great job they did by selling the house for well over the asking price!!! And then they wonder why it is that many people don’t like and don’t trust a real estate agent.
As an agent, your job is to help your client sell their home for the most money in the least amount of time possible and to make the process as stress free as you can. The market will ultimately decide what price is acceptable for the property. If someone is willing to pay x amount over the asking price, then that is what the house is worth. But marketing it knowing that the home is worth much more than the asking price is certainly questionable. It does generate interest but I’m not convinced the agent is working in the best interest of their seller. It seems like they are more working for themselves and their self-promotion goals.
The market is starting to balance out with more homes being listed for Spring. This practice will start to become less and less prevalent. The best advice I can give to you if you are looking to buy a home is to find an agent that will explain to you what is going on and help direct you to the homes that you can afford and steer you clear of the ones priced too low. If you are selling your home, just know that this lower price scheme will not work much longer as more and more buyers get wise to the practice.