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.
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 underpriced 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.