Do You Prefer an Offer at Asking or Over-Asking?

By
Real Estate Agent with William Raveis Real Estate

Do You Prefer an Offer at Asking or Over-Asking?

Sounds like a dumb question, I know. 

Picture this: You are a listing agent in a hot seller's market, with a listing you know has great demand.  You host a busy open house, and then the offers start to come in. 

How do you react when you receive them?

You are probably disappointed when an offer is well below asking.  You are probably happy when the offer is at, or around asking.  

What about over asking? Substantially over asking?

So, here you are with an offer, say, 15-20% over asking.  Most agents respond with elation, proud of themselves of fetching their clients such a great asking price, exceeding expectations.

Elation and pride would be common and understandable reactions.  

offer to purchase over asking

In doing some research for a client on recent condo sales in Brookline MA, I came accross a condo which had an asking price of $508,000.  It sold for $600,000.

Another multi-family house in Coolidge Corner was listed for $1,250,000, sold for $1,450,000.  

When homes are sold for outrageously over asking, more than 7% over asking, to me it signals the property was under priced.  It is a common danger of in a seller's market to under-price the home.  

Furthermore, a home sold so far over asking usually had multiple offers over asking, not just some nut with 92K to waste.  It is likely several buyers agreed to pay well in excess of what the seller was asking.

With offers 15% over asking price, I would worry greatly that I've underpriced the home.  If I've Accurate Pricingunderpriced it, I'll never know it's true potential.  More importantly, it means I've underestimated the market.  

When an agent doesn't have much business, or represents a listing in an area where she doesn't usually work, it is easy to price a listing too low.  Less active agents should seek the counsel of busy agents who are working with buyers - potential buyers for your listing - in their area.

Home sellers should look at an agent's track record.  If the agent is boasting of generating offers 10%+ over the asking price, you should be cautious.  This agent may not be pricing their listing accurately.

Hire a listing agent who has a track record of selling their listings close to 100% of the list price.  An agent who prices accurately is usually more knowledgeable and active in the local real estate market.  

 

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Massachusetts Norfolk County Brookline
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Rainmaker
531,401
Karen Baker
Sunset Beach and Beyond Realty - Sunset Beach, NC
Professional Help with Rapid Responses...

Ruth ~ You are absolutely right!  We would be very wary of a boasting agent, no matter what they boast about!!  

Mar 03, 2014 11:05 PM #1
Rainer
82,770
Jim Miner
Miner Noh & Associates - Phoenix, AZ
Loan Modfication & Short Sale Specialist

Couple of thoughts; You don't set the market and if the buyers are willing to pay over "the market" and you elect to discourage acceptance of the offer, are doing your seller a dis-service?  However, I would put in some extra effort confirming the financing is very solid and that the buyer knows they will be responsible for the difference when the home does not appraise (have them remove the appraisal contingency).  

Then when the market rolls over and the appraisal values are trailing in value the real fun begins for the listing agents.

Mar 03, 2014 11:10 PM #2
Rainer
76,509
Ruth Lerner
William Raveis Real Estate - Brookline, MA

Frank & Karen - I think it's important to point out what we are good at or a success which is relevant to the potential client.  But attitude is everything.  

Mar 03, 2014 11:14 PM #3
Rainer
76,509
Ruth Lerner
William Raveis Real Estate - Brookline, MA

Jim - Good point about appraisals.  We are almost past the trailing appraisals phase here.  

As for accepting offers - Buyers make the market, they set the prices.  With a few similar offers, it is clear where the market price should be.  The point is - the buyers are not paying "over the market", but agents are pricing listings UNDER the market!  

Mar 03, 2014 11:18 PM #4
Rainmaker
1,775,162
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

The other big concern is whether the house will appraise - and then that is a huge problem! 

Mar 04, 2014 10:18 PM #5
Rainmaker
531,401
Karen Baker
Sunset Beach and Beyond Realty - Sunset Beach, NC
Professional Help with Rapid Responses...

Ruth ~ Boasting can be elicited properly.  Listing your attributes is better.  You are so right about "attitude" being everything .... Confident attitudes. 

Mar 06, 2014 01:02 AM #6
Rainer
39,192
Jody Siano
Keller Williams Princeton - Princeton, NJ
With You Every Step

You are in a market that is experiencing huge increases.  Sometimes it's just hard to see how far above the market it actually is going to be. In my market, appraisal issues developed because the appraisers were not doing time based adjustments.  One way to get around this is to tell the agents that your seller will only entertain a contract that spells out "no appraisal contingency". I recently did this and it worked out well. One buyer said no way and the other were fine.

Mar 15, 2014 08:27 AM #7
Rainmaker
807,467
Troy Erickson AZ Realtor (602) 295-6807
Good Company Real Estate www.ChandlerRealEstate.weebly.com - Chandler, AZ
Your Chandler, Ahwatukee, and East Valley Realtor

Sometimes agents low-ball their list price in order to create a multiple offer situation and drive the sales price up. I have seen that work in some cases, however, the price cannot go so high as to not appraise.

Mar 20, 2014 06:30 AM #8
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Rainer
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Ruth Lerner

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