Question: When is an asking price NOT the asking price?
Answer: When an offer date is set.
This is the conclusion I’ve come to in the last month as I’ve written offers for clients (and lost out) or simply watched properties that got immediate and intense attention from buyers. It seems that anytime I ask the listing agent, “What are you doing about offers?” and the dreaded, “We’ve set a date of…” comes back as the reply, I know it can’t be good — for the buyer, that is.
There are exceptions, I know, but generally of late, when there’s an offer date set, its result is multiple offers and most of them are over asking. There was even a situation recently when I talked to a listing agent the morning he was accepting offers on a condo. He had one in hand and was expecting at least one other (he had given out 10 disclosure packets). My client had been considering, though not terribly seriously, submitting an offer although he could only (only!) offer asking price. When I told the agent that we weren’t going to submit an offer, though if we had it would be at asking price, he said in as kind and gentle a manner as possible, it wouldn’t have been worth our time. What that told me was the offer he already had in hand was over asking — and that subsequent offers were likely to be the same.
Obviously this isn’t the case in every neighborhood, in every price range. But it’s close. I represent clients in all price categories who are interested in nearly every San Francisco neighborhood. This scenario I’ve described is becoming increasingly more common.
And all of this is in the face of today’s headline that San Francisco real estate sales dropped 32% over a year ago, though sales prices were up almost 6%.
Bottom line: those who are truly in the hunt right now (as opposed to those who are interested but are sitting on the sidelines) are aggressive — and hungry. Maybe it’s pent up demand. Maybe it’s the terrific interest rates. But right here, right now, San Francisco is getting hot again. Trust me.
Cheers,
Meagan
Offer dates and multiple offers are functions of mis-priced or strategically priced homes — and are not an indication of a hot market. Personally I think under pricing a house is w/o question the best strategy in this market. Competitive situations almost always get the best results and gets the buyers emotionally involved in the process. Emotional people are not rational and will over pay or even worse (for them!) — compete against themselves. It all gets back to having a good buyers agent who can help you price the market and make a competitive / comp based offer. Personally, I’d rather lose a place than overpay for it.
“Personally, I’d rather lose a place than overpay for it.” :
a.k.a “winners curse”
“But right here, right now, San Francisco is getting hot again. Trust me.”
Meagan, I you’re smokin dope. Trust me
Interest rates have to be playing a part in getting buyers involved emotionally, there is a sense, and I have to agree, that this trend won’t last much longer and in a year when prices are back up and rates are up there will be a lot of people who waited and didn’t realize that the train has already left the station.
Hon’,
Where have you been for the last 8 yrs.? This has been going on for the last 8 yrs. and you are first discovering this now? You need to take up real estate in Nebraska where your slow discovery rate would be more suited! Trust me.
Rebecca
Peter Goss from Zephyr is the king of dishonest underpricing..watch out!
Underpricing is simply mean. You give home to potential buyers that they can afford their dream house when in reality it is out of their reach, for many at least. I find it appalling and an unethical practice.
you could say the same thing about folks that try and low ball you on your property.
;)
I think the argument goes both ways.
I think Alex once pointed to “the official asking price should be the price the seller is happy to sell at”.
now of course the seller wants as much as possible.
let’s take a property that comps point to 900-1000K. if seller is happy to get 950K and next street there is another property at 975K – I dont see any objection to ask 950 or even 925K.
It’s less misleading, annoining, than asking 899K or worse 1.050K.
now if we are talking about agents listing at 700K – then it’s edging to the scam.
————–
on the side of the topic, there is the question of the probates. From my understanding, a probate MUST sell. thus the properties are artificially underpriced. I still think of the 699K who went up 980K at the first round, then shot to 1.5M at the court auction.
699K was totally underpriced. 980K was an emotional overpriced overbid. And 1.5M was a legal scam by the buyer. What’s the conclusion? GET A GOOD HARD WORKING AGENT on your side, and run comps, educate yourself, and do your homework.
BEFORE you visit a property, you should run your comps and even before you set the foot in the property, you should have your own range of acceptable prices, from the “if it’s an exeptional property, I could/should offer that much” to “if it’s a trash property, I should offer that much”.
Once you visit the property… it’s nearly too late, and you’re already impacted by the asking price and the marketing of the agent.
[regarding the act of listing a property below an acceptable sales price] “you could say the same thing about folks that try and low ball you on your property.”
How is making an offer based on the buyer’s perceived value unethical ? Are you saying that buyers *must* offer at or above asking to be ethical ?
As to underpricing as a marketing gimmick to get more people see the home – this is essentially a bait-and-switch tactic. So if you think that a car dealer attracting buyers to his/her lot based on an advertised sales price on -one- vehicle (that sold before the ad appeared in the paper no less! ) is being ethical then so is intentional underlisting.
Yeah but it all comes down to whether or not the seller will actually sell the property or not, regardless of price. And please, let’s not put this all on realtors. It is the sellers decision ultimately. Buyers are hardly guiltless either. (Buyers who write contingency laden offers just to give themselves an out during the ensuing weeks — how does everyone feel about that, ethically?) Further, if something is widely known, as this tactic is widely known and understood, where’s the surprise? Or anger? And remember, this tactic can backfire.
Everybody loves a good deal. The buyers are always thinking “maybe I’ll get lucky this time, because nobody else will notice this house is for sale”.
Always go with the sales comparables. If it sounds too good to be true, it probably is. San Francisco has always been short on inventory. If that perfect house finally came on the market, what’s wrong with paying a little premium to get it. It’s no different than an auction at Bonhams, Christie’s. I don’t hear anyone saying they’re unethical.
hoegarden,
i was replying to randy’ comment about how it was mean to price something that might make someone unqualified feel they have a chance. my comment was about low ballers wasting the time of a listed property. if you can’t afford the price they are asking, don’t waste your time or the sellers by coming in with a ridiculous offer anywhere more than 10% below it. you are wasting the time of everyone involved and kidding yourself. i’ve heard of folks ignoring your future bids in response to this strategy as well.